Wednesday January 02, 2019

RAM Makers Plan to Cut Production Even Further

While desktop DDR4 memory seems to come from a countless number of brands, including Crucial, Corsair, G.Skill, Kingston, and many others, only a handful of manufacturers actually make the chips that go into those sticks. Micron, SK Hynix, and Samsung are the big 3 that really influence memory prices, as they've gradually absorbed most of the smaller chipmakers, and according to TrendForce's latest report, they're cutting production back even more than expected in 2019. Following the Intel CPU shortage and generally weak market demand, the manufacturers allegedly want to stop prices from dropping to keep profit margins high. However, Trendforce still expects memory prices to drop about 15% in Q1 2019, "less than 10%" in H2 2019, and around 5% after that.

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In the oligopolistic market with no new competitors, manufacturers have tried to adjust their production plans and cut down capex to avoid price competition. In terms of profitability, the gross margins of Samsung's and SK Hynix's DRAM production remain nearly 80%, while that of Micron remains over 60%. With such high margins, it is reasonable for the manufacturers to be conservative in their production outlook for 2019.