Samsung Becomes Latest Memory Fab to Cut Production Amidst Post-Pandemic Slump

Samsung became the latest memory foundry to announce production cuts for NAND and DRAM this week, following the continued slump in demand that has affected the entire memory industry over the past few months. Samsung’s planned ‘meaningful’ cuts would be the latest memory fab to make cuts given the significantly weakened market, making it the last of the Big Three and amid the current recession. Put an end to Samsung’s efforts to postpone production cuts. Try to gain market share.

The cut comes as Samsung Electronics experienced a significant decline in sales and profits, with sales down 19% and operating profit plummeting 95% in the first quarter. bloombergAnd while sales declines were expected (if not necessary) in the highly cyclical commodity memory industry, this latest boom-bust cycle has been more extreme than others. The explosion in demand during the pandemic has been replaced by a similarly massive recession that began in the fourth quarter of 2022 and is expected to continue for at least a few more quarters.

Samsung has long planned to keep production levels largely unchanged in order to gain market share from rivals SK hynix and Micron, which have already implemented their own production cuts. But the depth of this latest recession has finally forced Samsung to take action, as it has reached its limits.

But despite these cuts, Samsung has also made it clear that they are very short-term cuts and that the company intends to continue its long-term investment plans in new fabs.

“Although we have reduced our short-term production plans, we anticipate strong demand in the medium- to long-term, so to ensure essential cleanrooms and to increase our R&D investment to solidify our technological leadership. will continue to invest in its infrastructure,” reads Samsung.

For the time being, Samsung has not disclosed how much it is reducing its starting wafer volume and memory bit production. As a result, Samsung’s price cuts should help push his NAND and DRAM prices higher, but I’m not sure how much the company’s decision will affect memory prices overall, especially as the current overstock of inventory is slowly being cleared. It is difficult to estimate whether

Samsung is the world’s largest supplier of NAND and DRAM, and in the fourth quarter of last year 45.1% DRAM market revenue share and 33.8% According to TrendForce, NAND market revenue share.

It’s unclear whether Samsung could have gained market share in the first quarter because it didn’t cut production like its peers, but analysts quoted by Bloomberg said Samsung’s memory business unit lost 30% in the first quarter. We believe we may have lost billions of dollars.

The memory market is dominated by several major players such as Micron, Samsung and SK Hynix. Micron and SK Hynix continue to steadily ramp up production on their latest manufacturing processes, while lowering wafer starts on older production nodes. Leading-edge nodes tend to reduce memory chip costs and increase memory bit output per wafer, often offsetting reduced bit yields in older process technologies.

Despite the uncertainty surrounding Samsung’s memory production cuts, market analysts say the conglomerate’s decision to cut memory production will impact the market’s supply-demand balance and could delay the fall in memory prices in the second quarter. I believe there is

Counterpoint Research expects lower utilization rates in memory fabs to slow the decline in commodity memory prices. Nikkei AsiaStill, the surplus of NAND and DRAM in the market is the result of declining demand and excess inventories, so Samsung’s supply-side actions are not expected to affect sales. expects the oversupply problem to persist into the third quarter, when the market begins to reduce inventories in anticipation of seasonal demand in the fourth quarter.