Memory Cold Wave Begins in Q3... "Focus on Developing High-Value Products Rather Than 'Chicken Game'"

Stock Price Already Priced In... Tough Business Conditions

"Intense Competition to Secure 'Price Competitiveness' in DRAM Fine Processes and NAND Stacking"

Sample of 'CXL Memory' developed by SK Hynix. (Photo by SK Hynix)

[Asia Economy Reporter Moon Chaeseok] Global memory semiconductor companies such as Samsung Electronics and SK Hynix are facing profitability risk due to falling memory prices. Both companies have announced to the market that they plan to reduce or adjust their capital investments considering the possibility of demand decline and inventory increase. To defend short-term memory performance profitability, they also plan to accelerate the development of high value-added products rather than competing with low-price supply.

According to the industry and the Korea Exchange on the 1st, despite the reality of falling prices of global DRAM and NAND flash in the third quarter, the stock prices of the two companies slightly rose in the third quarter. Samsung Electronics' stock price rose by 9.3%, and SK Hynix's by 11.9% in the third quarter. However, on the 29th of last month, when the price drop news was announced, they fell by 0.81% and 1.51%, respectively. According to the announcement by market research firm DRAMeXchange on that trading day, the average fixed transaction price of PC DRAM general-purpose products (DDR4 8Gb) last month was $2.88 (about 3,744 KRW), down 14.03% from the previous month, and the NAND flash general-purpose products for memory cards and USB (128Gb 16Gx8 MLC) were $4.49 (about 5,838 KRW), down 3.75% from the previous month.

Although the price drop of memory semiconductors is not small, the consensus is that the third-quarter decline concerns were already reflected in the stock prices. However, unlike previous years, the industry worries that strong performance cannot be guaranteed even in the second half, which is usually the peak season. Seongyeon Seo, a researcher at Shin Young Securities, said, "(Samsung Electronics') current stock price mostly reflects concerns about IT demand," adding, "The speed of channel inventory depletion of memory semiconductors and the expansion of the foundry business will act as factors for flexible stock price increases."

Samsung Electronics' industry-leading speed GDDR6 (Graphics Double Data Rate 6) DRAM, released on the 14th of last month. (Photo by Samsung Electronics)

The industry unanimously stated that due to global economic recession-induced demand decline, the U.S. passing a $52 billion support bill, and requests for supply chain relocation, the memory and foundry sectors must solve problems through 'two-track' or 'three-track' strategies. Among them, defending the profitability of memory semiconductors, which accounted for a large portion of Samsung and SK's second-quarter performance, was seen as a major issue. Rather than a 'chicken game' strategy of increasing supply to lower prices, the key is to quickly launch high-profit, high-quality products to accelerate customer acquisition.

Recent memory product releases by domestic companies include Samsung Electronics' launch on the 14th of last month of the extreme ultraviolet (EUV) 10-nanometer 3rd generation (1z) 16Gb GDDR6 (Graphics Double Data Rate 6) DRAM, which is representative. As for customer acquisition news, on June 9th, SK Hynix supplied the highest-spec DRAM currently available, 'HBM3,' to NVIDIA.

An industry official said, "In DRAM, companies are fiercely competing to secure cost competitiveness by reducing semiconductor chip circuit line widths through fine processes, and in NAND by strengthening stacking technology," adding, "Supplying ultra-fast, high-capacity, low-power high value-added memory products is the battleground."

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