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Capitalism: Planning and DRAM
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  • More good news

    DRAM contract prices are set to fall nearly 20% sequentially in the first quarter of 2019, according to DRAMeXchange, which estimated previously a smaller 15% price decrease.

  • Major chip suppliers, including Samsung Electronics, Micron Technology, Toshiba and SK Hynix, which had been competing for Apple's orders for DRAM+NAND flash chips used in iPhone XS Max, are now worried about how to keep their memory production capacity occupied.

    But they fight hard to not allow price reductions :-) Despite profits are now comparable to selling drugs.

  • Contract prices for PC DRAM memory are expected to decrease by up to 25% sequentially in the first quarter followed by another drop of up to 15% in the second quarter, while prices for server DRAM chips will fall nearly 30% in the first quarter and 15% in the second, DRAMeXchange indicated.

  • Samsung Electronics, SK Hynix and Micron Technology - saw their combined DRAM and flash memory revenues drop 18% sequentially and 26% from a year earlier in the fourth quarter of 2018 due to seasonality and decreasing prices.

    Their combined revenues from DRAM slipped 17% sequentially and those from flash memory dropped 20% in the fourth quarter. DRAM accounted for 70% of the top-3 vendors' combined revenues in the fourth quarter, a percentage similar to that of the previous quarter.

  • DRAM contract prices for the first quarter of 2019 are likely to fall nearly 30% sequentially, according to DRAMeXchange, which estimated previously a smaller 25% decrease.

    DRAMeXchange in February already warned of a larger-than-expected sequential decline in DRAM contract prices for the current first quarter. The price tracker again revised its price outlook this quarter judging from the prices set for February.

  • DRAM memory contract prices have fallen further in March, and are expected to continue their downward trend through the second quarter indicating PC OEMs and other chip buyers continue to gain bargaining chips when negotiating prices, according to industry sources.

    Nevertheless, falls in the contract prices are expected to slow in the second quarter, said the sources. It is likely the prices will return to the levels two years ago, the sources continued.

  • DRAM ASPs are forecast to fall 15-20% sequentially in the second quarter of 2019, and drop another 10% in the third quarter. DRAMeXchange.

  • China at the moment has as many as 30 semiconductor fabs under construction - the most ambitious investment plan the global semiconductor industry has ever seen. China's memory industry was originally meant to be a key growth driver, but it has lost momentum after the US ban on exports to China-based DRAM maker JHICC. On the other hand, China's wafer foundry sector continues seeing expansions with at least 13 local fabs eyeing business opportunities in the sector.

    Hence the sudden move by cartel by fast lowering the DRAM prices. And most fun is that Chinese DDR4 modules assembly companies are now using it to wipe out competition at least in Asia.

    Not lowering DRAM price was not possible as it could lead to massive tragedy with at least one of cartel members that could go underwater and Samsung also bleeding to death, as now cartel hopes that at least some of planned fabs will be moved to something else and it will save them.

    Taiwan-based memory module firms basically intend to shift all their manufacturing lines for products exported to the US from China to Taiwan, while keeping those for products sold locally in China, the sources noted. However, none of the makers is expanding existing factory capacity in Taiwan

    It will be also big tragedy for Taiwan memory module sellers, as Chinese companies are closing fast. They are already losing lot of orders in Asia and exUSSR areas due to 15-20% of price advantages as all Chinese memory makers are run on government money and do not need profits.

  • According to the latest investigations by DRAMeXchange , a division of TrendForce , DRAM prices have faced mounting pressure to trend down in 1Q, the traditional offseason. Not only was this due to the production capacities added in 2H18, which found full expression in 1Q, but also a compressed procurement momentum by a demand side busy clearing out their own inventories. This caused a pronounced double-decline effect: Both DRAM prices and volume fell in 1Q, causing overall production revenue to drop by 28.6 % QoQ.

    Looking at 2Q19, ASP for 8GB modules have fallen to US$34 in April as seen from the final pricings by Tier-1 PC-OEMs, falling by 20% QoQ. Inventory levels kept rising for DRAM suppliers due to lukewarm trade. TrendForce predicts contract prices will keep plunging under as monthly deals are made in May and June and decline by nearly 25% for the whole 2Q. Server DRAMs, which contribute to over 30% of DRAM shipments, will face an even heavier price pressure.

    Revenues show dramatic drops QoQ across the board. Market leader Samsung's reference revenue started low and performed better than expected in 1Q mobile DRAM shipments, bringing 1Q sales bit performance on a par with the previous quarter. Still, revenue was still impacted by declining quotes and dropped by 26.3% QoQ and arrived at US$6.97 billion, with market share recuperating to 42.7%. SK Hynix's sales bit performance slid by 8%, which was slightly better than what it had expected, and arrived at US$4.88 billion in revenue 1Q, a 31.7% decline QoQ, and took home a 29.9% market share.

    Micron continued to hold third place and came to US$3.76 billion in revenue, sliding by 30.0% QoQ, while market share remained at about 23%. TrendForce predicts that the top three suppliers will continue utilizing aggressive quoting strategies in the coming months under pressure from mounting inventory levels.

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