Will the Boom in DRAM Market End Earlier than Expected?

There is growing concern about a D-RAM chicken game that may be initiated by Samsung Electronics. This is because some market experts are predicting that the rise in DRAM prices will slow down as Samsung Electronics, which accounts for about half of the market, will increase DRAM supply.

According to industry sources on November 2, DRAMeXchange, a market research company, said in a recent report, "Samsung is considering expanding its production capacity to expand its barrier to the market. Therefore, there is a possibility that a shortage of D-RAMs will come to an end faster than expected."

DRAMeXchange explained that the growth of DRAM supply slowed down over the past two years due to major manufacturers' production control and problems that stemmed from a transition into ten-nanometer process. As a result, the average price of a 4GB DDR4 DRAM module for PCs which stood at US$13 at the end of the second quarter of last year, shot up 130% to US$30.5 in the fourth quarter of this year, the market researcher added.

As a result, Samsung's DRAM operating profit ratio was staying at 59% while those of SK Hynix and Micron at 54% and 44%, respectively, DRAM Exchange said. However, as SK Hynix and Micron could expand their production capacities based on ample cash and resources, Samsung Electronics might increase its production capacity to maintain its leading position, the market researcher analyzed.

DRAMeXchange also pointed out that Samsung Electronics also needed to check potential market competitors as Chinese companies were expected to enter the memory semiconductor development stage beginning in 2018. The market researcher explained that with an eye towards maintaining its dominance in the market, Samsung Electronics will prevent DRAM prices from going up while maintaining technological competitiveness one to two years ahead of its competitors.