Samsung was the one main reminiscence maker that didn’t lower the output of DRAM and 3D NAND when demand for these commodity ICs dropped resulting from softening of PC and smartphone gross sales final yr. However as the corporate’s earnings plummeted in Q1 2023, it determined to cut back reminiscence manufacturing to steadiness the provision and demand state of affairs available on the market.
“We now have lower short-term manufacturing plans, however as we undertaking strong demand for the mid-to-long time period, we are going to proceed to spend money on infrastructure to safe important cleanrooms and to broaden R&D funding to solidify tech management,” a press release by Samsung printed by Bloomberg reads.
Samsung is the world’s largest provider of DRAM and NAND, and reminiscence gross sales considerably contribute to the corporate’s earnings. The corporate commanded a 45.1% share of DRAM market and a 33.8% income share of NAND market in This autumn 2022, in response to TrendForce.
Whereas the corporate formally said that it could lower reminiscence manufacturing, it by no means revealed how considerably it intends to cut back wafer begins and reminiscence bits output.
Most of Samsung’s rivals decreased reminiscence manufacturing on older applied sciences however continued to progressively ramp up reminiscence manufacturing on newer fabrication processes. Sometimes, the most recent nodes lower chip prices and enhance bit output per wafer, so in lots of instances, reminiscence ramp on newer nodes greater than offsets manufacturing cuts on older nodes relating to bits output.
Nevertheless, analysts consider that Samsung’s intention to chop down reminiscence manufacturing will have an effect on the demand and provide steadiness out there and can not less than decelerate the collapse of reminiscence costs in Q2 2023.
“Counterpoint expects that the utilization fee discount [will] decelerate the decline of commodity reminiscence costs,” Brady Wang, a senior analyst, advised Nikkei Asia. “Nonetheless, this oversupply is because of weakening demand and excessive stock, so Samsung’s manufacturing lower is just not anticipated to stimulate gross sales. Due to this fact, Counterpoint believes that the oversupply state of affairs will proceed till the third quarter when the market begins to deplete stock for the fourth quarter seasonal demand.”
Samsung’s Q1 2023 income dropped to 63 trillion gained ($48.877 billion), or 19% in comparison with the identical quarter a yr in the past. The corporate’s revenue collapsed to 600 billion gained ($450 million), or by 95% year-over-year, falling in need of the 1.4 trillion gained ($1.064 billion) common forecasted by analysts.