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Samsung to Double NAND Memory Output Capacity in China


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Samsung Electronics has announced last Wednesday that they are planning to double their NAND memory output capacity in china. The announcement, done at a groundbreaking ceremony in its Xi'an fabrication facility in inland Shaanxi Province, should see some $7 billion invested over the course of three years. With this investment in both facilities and machinery, Samsung expected production capacity to roughly double from current values to some 220,000, 300 mm 3-D flash memory wafers by 2020.

The motives for this increased Samsung investment in mainland China are being put forward as a way for the South Korean giant to temper relationships with China, one of its greatest importers of NAND memory. Further investment into China likely assuages the country's protectionist policies, since at least it receives something back from its import volume. By investing further into a second assembly line at its Xi'an fabrication facility, Samsung is also looking to reduce risk derived from over-condensed manufacturing facilities in South Korea.

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Then, some of the higher-ups had the need to charge their smartphones, but there were no quick-chargers available, so NAND prices rose 5% more.
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At the event, the CEO didn't notice that his coffee had salt in it instead of sugar, and decided to raise NAND prices by another 15% until further notice.
Doubling the manufacturing capacity of the dominant corporation doesn't fix the oligopoly problem. So they decided to raise the prices 10% more xD


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Doubling the manufacturing capacity of the dominant corporation doesn't fix the oligopoly problem. So they decided to raise the prices 10% more xD
Doubling the manufacturing capacity of the dormant corporation shorted out the national powergrid so they decided to raise their prices 15% more due to NAND shortages
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LOL...guys you are awesome...that is why i love TPU!
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Doubling the manufacturing capacity of the dominant corporation doesn't fix the oligopoly problem. So they decided to raise the prices 10% more xD
Means higher prices are likely to stay.
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Because you interrupted the flow of thread posting, prices went up another 10%.


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Fortunately Micron released a good product with a large amount of stock and for 3 whole days there was blissful drops in price by 50%, followed by an immediate 100% surge as Micron exchausted its three day stock.
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FYI: In the third quarter of 2017, Samsung achieved a revenue of record high 8.8 billion U.S. dollars from global DRAM sales with a current operating margin of 59% (SK Hynix's and Micron's operating margins are also impressive, at 54% and 44% respectively.)

The fact that Samsung (according to data from Q3 2017) accounts for over 45.8% of the global DRAM chip market [equal to SK Hynix and Micron combined) and 38% of the global NAND market (more than Toshiba and WD/Sandisk combined) means that they're actions, especially with respect to prices, production volume, and capital expenditure/investment, heavily influence the rest of the industry. This dynamic has been particularly heightened in the last several years following incorrect production forecasts affecting the entire industry and market in addition to China's exceptional determination to enter the market as a major competitor which have both resulted in the current situation characterized by offensively high prices for memory.

The relationship among the top three suppliers, Micron, SK Hynix and Samsung, changed after all three paid dearly for building up far too much production capacity based on strong memory prices in 2014. Based on the oligopolistic market situation, the trio opted for co-existence as the best way to maximize their own profitability. They turned away from aggressively competing for market share through price reduction and capacity expansion, and instead focused on maintaining profitability above all and avoiding actions that could result in decreasing their margins. There have been multiple memory market crashes throughout history and despite maintaining an average growth rate above 10% over the last 20 years, the industry experiences a higher than average degree of market volatility. Maintaining their margins, and therefore the signs of the companies' economic health, was necessary especially considering China's desperation to get into the industry by any means, including acquiring an economically wounded company [they tried landing the killing blow on Micron a few years back].

While maintaining profitability was the short term goal, the long term goal among the "Three Kings", Samsung, SK Hynix, and Micron (which as of Q4 2017 account for 95.5% of the DRAM market) is to keep Chinese manufacturers out of the market for as long as possible. Luckily for us, the PC community, the desire to exclude China is probably our best hope of lowering memory prices, and here's why:

Following Micron's 63% plunge in stock prices in 2015, the Chinese State enterprise Tsinghua Unigroup made several offers to purchase Micron, and later, upon being rebuffed, tried to pitch a joint venture which went nowhere as well. This is due to the fact that while China has the capital to invest in production capacity, there is no way China can make technological inroads into the memory market without a joint venture or partnership.For example, as of 2017 SMIC, China's largest indigenous foundry has been in business for about 15 years and are just starting to have significant production of 28-nm devices which places them about five generations behind TSMC with respect to technology. If after 15 years they can't compete with the foundry leaders because they lack the technological ability, it's probably not much different with respect to memory.\​

What's interesting is that as a result of China's failed attempts at buying or buying into leading semiconductor companies coupled with the fact that they've imported $221,578,000,000 worth of IC products annually for the past four years, China has put every effort into achieving self-sufficiency with NAND and DRAM manufacturing. In turn, this has influenced the "Three Kings" to refocus on increasing production volume. Analysts estimate capital expenditures to grow 35 percent in 2018, reaching $90.8 billion industry wide. SK Hynix is now transitioning to the 18nm node and will be building its second fab in the Chinese city of Wuxi this year. Micron is expected to build new facilities as well, causing samsung to react accordingly. While Samsung spent $11.3 billion in semiconductor capital expenditures last year they expect to double that figure this year to $26 billion with $14 billion earmarked for an enormous ramp-up in 3D NAND production and $7 billion for DRAM process migration and additional capacity to make up for capacity loss due to migration. For DRAM, if Samsung follows through with its capacity expansion, the company’s output for 2018 will increase by 80,000 to 100,000 wafers per month. This means Samsung’s total DRAM production capacity would increase from 390,000 wafers per month at the end of 2017 to nearly 500,000 wafers per month by the end of 2018.
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Meanwhile price/GB for NAND flash has been going down since forever, but that first bit of this thread was good fun regardless :toast: