Samsung to produce DRAM chips at Line-17 fab, causes concerns of oversupply
Josephine Lien, Taipei; Steve Shen, DIGITIMES [Thursday 21 August 2014]
The DRAM and NAND flash chip markets are on alert with spot DRAM prices making a downward correction that could upset contract quotes for September 2014. Prices of NAND flash remain at a standstill despite a built-up of inventory by Apple, according to industry sources.
The DRAM industry has been enjoying booming sales for over 20 months following industry consolidation, but the industry could be caught in oversupply as Samsung has announced it will produce DRAM chips at its Line-17 fab, instead of rolling out logic chips as planned earlier, said the sources.
Decreasing smartphone sales and the loss of Apple's application processor orders to Taiwan Semiconductor Manufacturing Company (TSMC) has forced Samsung to decide to ramp up its DRAM output in order to shore up its profitability, the sources commented.
Samsung is expected to see its share in the global smartphone market decline to 25% in 2015 compared to 31% in 2013, noted the sources, citing data from market research firms.
Additionally, Samsung will begin volume production of 25nm chips in the second half of 2014, as Micron Technology/Inotera Memories will begin rolling out 20nm chips, moves which will add more production capacity to the industry, noted the sources.
While contract quotes for DRAM chips are currently at high levels, with 4GB DDR3 modules hovering at US$34, chip suppliers expect prices to become more volatile in September.
The situation in the NAND flash market is more severe than that of the DRAM market as strong demand from Apple should have driven up NAND flash prices significantly. However, price hikes for NAND flash chips have been limited. Furthermore, prices may see a correction after vendors release new mobile devices, added the sources.
NAND flash suppliers hoped that sales of SSD devices will see a major take-off in 2014, boosting sales of NAND flash chips. However, price competition for market share among SSD vendors has impeded any healthy development of the SSD industry, said the sources.
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