Supply and demand of memory chips is likely to be more balanced next year due to production cuts, stronger capacity and a rebound in demand following a substantial price correction, Fitch Ratings Inc said yesterday.
Demand is expected to recover thanks to data expansion and upgrades to high-density servers and smartphones, as well as greater end-market diversification, especially into the automotive and industrial sectors, the ratings agency said.
However, in the short term memorychip manufacturers would continue to suffer from oversupply, the structural decline of the smartphone market and weaker-than-expected demand from servers, it said.
“We believe the NAND market will improve faster than DRAM due to demand recovery following deep price corrections since late 2018 and capital expenditure cuts by major companies such as SK Hynix Inc and Micron Technology Inc,” Fitch said in a report.
The industry would gradually absorb excess capacity this year, which would support a more beneficial pricing environment next year, it added.
Average selling prices of PC and server DRAM products fell by nearly 30 percent in the second quarter, Fitch said, citing market research firm TrendForce Corp (集邦科技).
The price decline in mobile DRAM was smaller — about 10 to 20 percent — thanks to a less aggressive price increase during the previous up-cycle, while NAND flash prices were largely flat last quarter, it said.
Samsung Electronics Co consolidated its position in both the DRAM and NAND markets with its market share last quarter growing to 46 percent and 35 percent respectively due to a recovery in server demand, Fitch said.
Samsung’s leading technological capability and continued improvements have led to strong shipment growth, it said.
Japan-South Korea trade tensions have had minimal effects on the memorychip industry, at least in the short term, as Japan’s tighter export controls do not impose a complete ban on the supply of key semiconductor materials, while South Korean manufacturers are also actively seeking alternative suppliers, Fitch said
Japan has approved shipments of key materials to South Korea three times since introducing the export curbs in early July, the ratings agency said.
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