DRAM chip prices are expected to drop 15 percent this quarter, as poor seasonal demand for end products and US-China trade tensions have weighed on DRAM demand, TrendForce Corp (集邦科技) said yesterday.
DRAM chip prices slid 10 percent in the final quarter of last year, after trending up for nine quarters, the Taipei-based market researcher said.
“On the demand front, the first quarter of 2019 will witness the weakest demand of the year, due to holidays and seasonal headwinds,” TrendForce said in a report. “There is currently no sign of demand recovery in the second quarter or afterward.”
Another 10 percent quarterly price reduction is expected next quarter, it said.
This year, prices might shrink about 5 percent year-on-year if demand does not pick up significantly in the second half, the researcher said.
However, DRAM supply is increasing as the world’s major memorychip suppliers, led by Samsung Electronics Co, plan to ramp up production using 1Y-nanometer technology this quarter, which is usually the slack season, TrendForce said in a report released last month.
This quarter, mobile DRAM chip prices are expected to sink further than last quarter’s 5 percent, because smartphone shipments are expected to be weaker than usual, TrendForce said.
Due to lackluster demand outlook for end products — from PCs and servers to smartphones — the world’s major memorychip makers plan to slash capital expenditure by about 10 percent to US$18 billion this year and decrease shipment growth, TrendForce said.
That represents the most conservative capital spending in the past few years, the researcher said.
Samsung plans to reduce capital spending to about US$8 billion, which would mainly go toward technological migration and helping the company increase its shipments by 20 percent annually, it said.
SK Hynix Inc cut its capital spending to about US$5.5 billion, and plans to spend it on helping the company increase shipments by 21 percent this year, TrendForce said.
Micron Technology Inc reduced its capital spending to US$3 billion this year. The US memorychip maker also lowered its shipment growth rate to 15 percent from an original estimate of 20 percent, with the aim of reducing excess inventory, the researcher said.
In terms of profitability, Samsung and SK Hynix saw their gross margin for DRAM products at nearly 80 percent, while Micron’s gross margin remained at more than 60 percent, Trendforce said.
“With such a high margin, it is reasonable for those manufacturers to scale back production plans for 2019,” Trendforce said in the report.
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