"DRAM Prices to Fall in Q4" Is the Supercycle Disappearing... Lee Jae-yong's Return Faces a Thorny Path

TrendForce Forecasts Up to 5% Decline in Q4... Rising Concerns Over Samsung Electronics' Earnings Deterioration

Lee Jae-yong, Vice Chairman of Samsung Electronics

[Asia Economy Reporter Jeong Hyunjin] Amid the intensifying global semiconductor hegemony battle, signs of a sharp cooling in the semiconductor supercycle (period of booming growth) have begun to emerge. Concerns over the performance of Samsung Electronics, the industry leader, have grown as forecasts of a decline in DRAM prices support the market's memory semiconductor peak theory. Vice Chairman Lee Jae-yong of Samsung Electronics, who will be released on parole on the 13th, is expected to face a thorny path as full-scale management activities will be difficult due to employment restrictions.

According to the industry on the 11th, Taiwanese market research firm TrendForce forecast that the fixed transaction price of PC DRAM will rise by 3-8%, but will fall by 0-5% starting in the fourth quarter. This is the first time TrendForce has predicted a decline in DRAM prices this year. The fixed transaction price of PC DRAM rose 5% in the first quarter and nearly 30% in the second quarter. Last month, it entered the $4 range for the first time in over two years, showing an upward trend. Accordingly, the industry initially expected the semiconductor supercycle to fully kick off this year, leading to a mid- to long-term market boom.

However, the mood reversed as DRAM spot prices recently showed a downward trend. Although most memory semiconductors are traded at fixed prices, spot prices serve as a leading indicator, signaling market changes. In the third quarter of this year, the spot price of PC DRAM (DDR4 8Gb 2666Mbps) fell by 10% within a month. TrendForce explained, "PC original equipment manufacturers (OEMs) have accumulated large DRAM inventories, and with declining laptop demand in Europe and the United States, overall demand for PC DRAM is expected to decrease."

If the memory semiconductor prices, which had been rising throughout the first half of this year, turn to a downward trend, it will inevitably lead to a deterioration in Samsung Electronics' performance, which focuses on this sector. Samsung Electronics posted nearly 18 trillion won in sales from memory semiconductors alone in the second quarter, leading to an 'earnings surprise.' Nevertheless, Samsung's stock price has fallen to the '70,000 won electronics' level, reflecting concerns about the business environment.

Ultimately, market attention is focused on Vice Chairman Lee's return to the front lines of management. In the face of changes in the semiconductor market and intensifying competition, it is important for Samsung Electronics to solidify its position based on its overwhelming market share in memory semiconductors, while rapidly enhancing competitiveness in system semiconductors such as foundry, expanding its market presence and sales proportion. Samsung Electronics has announced plans to invest 171 trillion won in system semiconductors by 2030, including new and expanded semiconductor factories in the United States, and to carry out meaningful mergers and acquisitions (M&A) within three years. However, the business community agrees that the role of the head of the group is necessary to execute these plans and set the direction.

Especially in a situation where the global semiconductor industry is fiercely competing in investment, the speed at which Samsung Electronics makes investment decisions is also crucial to avoid falling behind. Already, TSMC, the number one foundry company, and U.S. semiconductor company Intel have announced large-scale investment plans in the first half of this year. According to Taiwan's United Daily News and others, TSMC plans to begin mass production of the world's first 3nm (nanometer; 1nm is one-billionth of a meter) semiconductors around July next year, one year earlier than previously expected, overtaking Samsung Electronics. Intel, which declared the resumption of its foundry business in March, has expressed ambitions to catch up with TSMC and Samsung Electronics in advanced processes and take leadership by 2025.

In response, the business community has expressed regret that Vice Chairman Lee is returning to management through parole and emphasized the need for administrative consideration to allow him to focus on management activities. According to the Enforcement Decree of the Act on the Aggravated Punishment of Specific Economic Crimes, employment is restricted for five years after the type of sentence is served, but since parole was granted for national economic development, they are requesting flexible application of this rule. However, Minister of Justice Park Beom-gye stated the day before that parole and lifting of employment restrictions are separate issues and that there has been no consideration of lifting the restrictions.

This content was produced with the assistance of AI translation services.