The global production of memory chips is experiencing an enormous drop in demand. The second half of 2022 saw the biggest quarterly price declines on record. writes Bloomberg agency.
According to TrendForce, the average DRAM price fell 31.4% in the third quarter of last year compared to the same period in 2021, and the decline accelerated to 34.4% in the fourth quarter. The situation for NAND flash chips isn’t much better, analysts said, noting that the quarters saw the industry’s biggest price drop since 2006.
Due to the current situation, most of the leading suppliers have reduced production volumes and suspended the construction of new plants. Micron Technology, SK hynix and Kioxia announced measures to stabilize the market by curbing oversupply. The only exception is Samsung Electronics, which plans to allocate more than $30 billion to increase production capacity this year.
Samsung is betting on long-term growth in memory chip consumption, driven by the increasing use of resource-intensive cloud services, an increase in connected car production and the introduction of artificial intelligence systems. In its latest quarterly report, the company predicts a further decline in the smartphone market, but also expects that AI solutions such as the chatbot ChatGPT will increase demand for its products.
Earlier this month, BusinessKorea reported that Samsung Electronics and SK hynix saw a significant increase in orders for high-bandwidth memory (HBM) this year, which combined with powerful processors and graphics accelerators can significantly improve server performance for training and AI computing.