Samsungs decision to cut memory production pushes Microns inventories up

Samsung’s decision to cut memory production pushes Micron’s inventories up 6%

For the first time since 1996, Samsung Electronics had to announce its willingness to throttle memory production. This indicates a really difficult situation in this market. According to experts, Samsung’s decision, combined with similar measures taken by other memory manufacturers, creates the conditions for the market to recover by the end of the year.

    Image source: Samsung Electronics

Image source: Samsung Electronics

Shares of Micron Technology rose nearly 6% in pre-trade on Monday as investors believed in the coming normalization of supply and demand. From forecasts According to Citi analysts, the DRAM market can now be expected to recover in the second half of the year. In this segment, Samsung controls almost half of the global market, so the drop in production volumes from the South Korean giant will definitely affect supply.

By some estimates, Samsung’s RAM inventory is measured at 21 weeks of sale, and in the first quarter the company saw customer orders drop by at least 30%. At the same time, contract prices for such memory sequentially fell by 25-30%, and therefore Samsung’s decision to reduce production volumes can be considered balanced and timely. Analysts assume that the company will mainly focus on reducing production volumes DDR4 chips. Micron Technology and SK hynix have already announced their intention to scale back production and investment this year, and only Samsung has shown traditional doggedness on the matter. Now that this factor is no longer supporting supply in the DRAM market, the recovery could be faster.

About 70% of RAM chips are sold for use in server systems and mobile devices. According to Citi analysts, these market segments should stabilize in the second half of this year.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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