There will be a market downturn of memory chips so Samsung plans to slow down expanding pace Meta description

Due to pessimistic outlook of global semiconductor in 2019 from analysts, Samsung, the world’s largest memory chip supplier, is considering to slow down its pace in expanding production equipment, according to Korea Herald news on November 26th.

    The main agenda of Samsung’s “Device Solution Department” on the Global Business Strategy Conference is: how to deal with possible excess supply of memory chips in next year. It is generally predicted in the industry that there will be a slide of memory chips demand in next year.

    According to some one in the industry, “Samsung has a discussion on adjusting rising pace of DRAM and NAND flash memory chip capacity, on the conference hosted by Kim Ki-nam, Samsung joint CEO and principle of device solution department, and principle of overseas branches.”

    It is reported that Samsung will cut memory chip capacity to keep rise of DRAM and NAND chips under 20% and 30%, respectively. The 2018 “Bit growth” of DRAM chips will be up to 20% and NAND chips is hopeful to reach 40%, said by Samsung on its Q3 earnings call in November. “Bit growth” is the scale of memory chip growth calculated by the unit of “bit”, which helps calculating capacity of each chip supplier. With expectation of “Bit growth” falling, it is predicted that Samsung will conservatively execute its memory production and investment plan.  

    As a result, the execution of investment plan will be more cautious than the initial plan, which is that Samsung invests $2.68 billion in the second DRAM chips production line of the latest park in Pyeongtaek. Thus, Samsung will prevent the memory prices falling by limiting its supply increasing. The second DRAM chip production line will finish in the first half of next year.

    In addition, Samsung is predicted to limit its DRAM capacity in the second floor production area of first production line because there may be excess supply in next year. “The original plan of Samsung is adding 40 thousand wafers in Pyeongtaek DRAM production line, however, it is considered to add 20 thousand to 30 thousand wafers in the first six months of 2019.” said by an industrial executive. 

    As Samsung lowers expectation of its fourth quarter revenue, which makes analysts to be more pessimistic about its performance in 2019.

    The demand of global memory chips in the first six months of next year will slides, but will rebound in the second half of next year according to the market analysts.