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The price may fall another 20%! In 2019, the three major DRAM factories reduced capital expenditures and slowed the pace of expansion to cope with

  In the past four years, DRAM has grown very fast, and in the past two years, the average selling price has risen strongly, and it has reached the top of the fastest growing product list in 2018. However, DRAMeXchange's latest survey shows that after the DRAM contract price in the fourth quarter of 2018 was significantly revised by about 10% from the previous quarter, the demand for terminal products such as personal computers (PCs), servers, and smart phones was weak in 2019, so the major DRAM suppliers were reduced. Capital expenditures, slowing new capacity, with a view to slowing down the price decline.

DRAMeXchange predicts that the total capital expenditure for production in the DRAM industry in 2019 will be approximately $18 billion, an annual reduction of approximately 10%, the most conservative investment level in recent years.

Among them, two Korean manufacturers Samsung and SK Hynix first announced that they will slow down their investment plan for 2019. The total investment of Samsung DRAM is about 8 billion US dollars, mainly used for the continuous transfer of 1y nano-advanced process and the development of new products. The filming plan is the most conservative one in recent years. The bit growth is about 20% and reaches a new low. SK Hynix this year, due to the addition of new manufacturers in Wuxi, its bit growth has fallen to around 21%, slightly higher than Samsung. However, its DRAM investment amount has also been reduced to approximately US$5.5 billion, mainly for continuous transfer into new processes and improvement in yield.

Recently, Micron also announced that it will cut its capital expenditure to about US$3 billion in 2019, and revised its production target growth target of 2019 from the original 20% to 15%, in order to improve the continuous increase of inventory. At present, Micron has no expansion plans in Taichung, Taoyuan, and Hiroshima, Japan. In 2019, the film production level will be maintained at 350,000 pieces per month, and the growth of the bit will only come from 1 y nano. DRAMeXchange believes that because of the weaker cost structure and the two Korean factories, Micron has a larger response to the continued decline in prices. In the case of only 15% growth in supply for two consecutive years, Micron's market share has continued to be compressed.

Earlier, SEMI also released a report that the capital expenditure of memory chip manufacturers is expected to decline by 19% in 2019, DRAM is expected to decline by 23%, and NAND flash memory is expected to decline by 13%.

It can be seen from the operation direction of the three major manufacturers to repair capital expenditures in 2019. Since there is no competition from new manufacturers, each supplier chooses to adjust production capacity to avoid price competition. From the profit performance, DRAMeXchange expects Samsung and SK Hynix to produce nearly 80% of the gross profit of DRAM, and Micron is above 60%. In terms of average selling unit price, DRAMeXchange expects the average DRAM sales unit price to fall by 20% in 2019.

Industry insiders pointed out that although the PC and smartphone markets are weakening, DRAM is still an important component of technology products. It is believed that with the advent of 5G and AI, strong demand for DRAM and even NAND Flash will be re-opened.