Changing D-RAM Market Sentiment... Semiconductor Industry Says "Not the Stage to Revise Production Cut Strategy"

Expectations are emerging for a recovery in demand for memory semiconductors. Reports from the securities industry indicate that prices for some products have risen. There is also hopeful speculation that semiconductor manufacturers will emerge from losses around the first quarter of next year. However, the semiconductor industry believes it is not yet time to revise the memory semiconductor production cut strategy. The NAND market is still in an emergency situation due to excess inventory, and it is considered premature to say that DRAM demand has fully recovered.

Samsung Electronics is currently maintaining its existing production cut strategy for memory semiconductors. The stance is that there is no change in the production cut policy applied to both DRAM and NAND. SK Hynix also stated, "In the case of DRAM, there is still a large inventory mainly of legacy (mature process) products," and "we are maintaining the existing production cut policy."

The semiconductor industry views that while the memory semiconductor market may have passed its worst phase, it is still too early to talk about a full recovery. This is also why it is difficult to easily decide on normalizing production lines. Samsung Electronics and SK Hynix are likely to continue operating at a loss in their semiconductor divisions in the third quarter of this year.

However, in the market, there is growing optimism that the active memory semiconductor production cuts implemented by the global semiconductor industry this year are showing effects, leading to expectations of demand recovery and DRAM price increases. Accordingly, even if NAND production cuts are further expanded in the second half of the year, there is a growing sentiment that the production cut policy for DRAM may weaken with the normalization of some production lines.

In fact, prices for some DRAM products such as DDR5 have started to rebound. In the mobile market, where inventory adjustments were completed first, the demand for smartphone DRAM exceeds supply, creating an environment where inventory depletion and price increases can form a virtuous cycle. There are also reports that the semiconductor industry raised prices for mobile memory semiconductors this month by as little as 7-9% and in some cases by double digits.

Although prices for mobile DRAM and NAND have fallen over the past one to two years, the fact that prices are rising again starting with some DRAM products can be interpreted as a mood that could lead to revising the existing production cut strategy.

Regarding SK Hynix's memory semiconductors being used in Huawei's new smartphones, there is speculation that Chinese local manufacturers such as Oppo, Vivo, and Xiaomi may proactively stockpile memory inventory in preparation for potential tightening of U.S. sanctions in the future. If Chinese manufacturers begin stockpiling memory semiconductors, prices for both DDR4, which was the focus of concentrated production cuts, and DDR5 products, which have started to rebound due to AI demand, could rise simultaneously.

Ko Young-min, a researcher at Daol Investment & Securities, commented on the possibility of changes in the semiconductor industry's production cut strategy: "The need for proactive memory inventory stockpiling by Chinese companies is expanding, which could generate additional demand. However, if the semiconductor industry revises its production cut strategy and decides to normalize production early, it could dampen buyers' purchasing sentiment at a time when prices for some products are rebounding." He added, "If the production cut policy is normalized early, significant inventory reduction may not be possible in early 2024, which means achieving maximum profits in 2024 would be impossible."

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