South Korean memory chip leader Samsung has recently decided to significantly reduce production. The industry predicts that the positive benefits brought by Samsung‘s significant reduction may manifest by the end of the second quarter, and the oversupply situation in the market will slow down. Taiwan‘s memory related businesses such as South Asia Technology, Huabang, and Qunlian will also improve their operations.http://www.ic-bom.com/

According to Yonhap News Agency, Samsung Electronics‘ operating profit sharply decreased by 95.5% in the first quarter, and the semiconductor department was even more in a loss. Therefore, it decided to significantly reduce chip production, marking Samsung‘s first public announcement of a production reduction in 25 years.

Industry analysis shows that the production process of memory chips takes about three months. The positive benefits brought by Samsung‘s major production reduction to the industry are expected to emerge in three to six months, which is likely to take effect as soon as the end of June. Starting from the second half of the year, the inventory consumption rate of major manufacturers will accelerate, promoting an improvement in the overall semiconductor industry situation.http://www.ic-bom.com/

Most South Korean securities firms believe that Samsung‘s inventory will peak this quarter, and revenue will significantly improve from the third quarter by adjusting production lines and reducing wafer production directly. Samsung estimated in April that inventory levels will decrease starting from the second quarter, and the decline will continue to expand in the second half of the year. After adjusting inventory in the first half of the year, customers expect demand to warm up in the second half of the year.

According to a report by Caixun, Samsung has a global market share of over 45% in DRAM and NAND Flash. Although semiconductor products such as memory only accounted for 28% of overall revenue in the fourth quarter of 2022, the semiconductor division is extremely important for Samsung‘s profitability. However, a year ago, in the fourth quarter of 2021, out of the entire 13 trillion won profit of Samsung Electronics, 8.84 trillion won came from the semiconductor department, accounting for as much as 68%; But by the fourth quarter of last year, the revenue contribution of the semiconductor department was only 6% left!

More seriously, with the decline in memory prices, the profit situation of Samsung‘s memory department in the first quarter of this year was even worse. According to the analysis of Jibang Technology, the NAND Flash market is still in a situation of oversupply. After the total revenue of NAND Flash decreased by 25% in the fourth quarter of last year, prices in the second quarter of this year will still decline by 5% to 10% compared to the previous quarter. As for DRAM prices, Jibang Technology observes that the average price fell by nearly 20% in the first quarter of this year, and will still fall by 10% to 15% in the second quarter.http://www.ic-bom.com/

This time, even Samsung was forced to reduce production. According to Financial News, Samsung currently has a factory in Xi‘an that produces NAND Flash memory, while Hynix‘s largest DRAM factory is located in Wuxi, China; According to estimates from the Taiwan Academy of Economics, 14.7% of Samsung Electronics‘ revenue in 2022 came from DRAM and 8.6% from NAND Flash. Among them, Samsung Xi‘an Factory accounts for 40% of Samsung‘s NAND Flash production capacity, and two factories have a monthly production capacity of 250000 pieces, accounting for 1/10 of the global NAND Flash production capacity. It is also Samsung‘s only memory factory overseas.

Japanese Media Reveals a Cataclysm in the Memory Industry: Fears of Brewing and a Big Shuffle

The semiconductor industry is in oversupply, especially with memory chips becoming a disaster zone. Samsung, the world‘s largest memory chip manufacturer, is expected to experience a 92% drop in profits in the first quarter, hitting a 14-year low. The Nikkei Chinese website has written an article warning that due to the continued weakness of the memory market, manufacturers may face a reshuffle.

The report points out that in the past, companies in the memory industry were eliminated and restructured during industry downturns. For example, in the second half of the 1990s, including Motorola, Deyi, Fujitsu, etc., all withdrew from the memory business. Afterwards, Hitachi and NEC‘s memory departments merged their DRAM business to establish Erbita Memory. In 2009, after the financial crisis, Qimonda in Germany went bankrupt, Erbita also went bankrupt in 2012, and later merged into Micron.http://www.ic-bom.com/

The report warns that as the number of memory manufacturers decreases, the performance of surviving manufacturers has rapidly increased. In the past decade, industrial demand has shown explosive growth. However, Samsung, which currently ranks first in the market, has also fallen into losses. The memory market continues to be weak, and manufacturers may face reshuffle.

According to Omdia, a well-known market research firm in the UK, in 2022, Samsung, a Korean manufacturer, ranked first with a market share of 38.7%, followed by SK Hynix with a market share of 24%, and Meichang Meguiar with a market share of 19.2%. Japanese Armor Holdings and American Vetten Electronics, on the other hand, paid 7.9% and 5.6% respectively to the bottom. If these two manufacturers continue to suffer losses, they may face bankruptcy and restructuring crises.http://www.ic-bom.com/