Samsung Electronics shares recently corrected, weighed down by concerns over a possible market peak and downturn for semiconductors.
Yet Shinhan Investment Corp. dismissed these concerns in a research report on Sept. 28. “Contrary to market concerns, we expect DRAM supply to remain tight through 2019 and the pace of NAND price declines to slow down.”
The brokerage expects DRAM prices to dip by roughly 3 percent quarter over quarter in the fourth quarter of 2018.
Noting that Samsung Electronics shares are weak on concerns over a possible plunge in DRAM prices, the brokerage says it believes the pace of DRAM price declines will slow considerably to 2-5 percent per quarter (similar to the rate of production cost improvement) going forward.
It also forecasts that global DRAM bit supply will likely increase by 18 percent year over year in 2019, coming in far below the 23 percent growth expected for full-year 2018.
For NAND, Shinhan expects to see the pace of price declines slow down from the fourth quarter of 2018. It notes that NAND manufacturers have slashed their capex spending amid continued growth in demand from the launch of new iPhone models. “By end-2018, we expect NAND inventory levels to fall to normal levels of two to three weeks,” it says.
Based on these projections, the brokerage says concerns over possible memory market peak and downturn will gradually dissipate.
It further says semiconductor earnings are likely to continue on a completely different path compared with past cycles.