Growing Concerns
Memory semiconductor prices plunged in January this year. The price of DRAM chips showed a whopping 17.24 percent drop, the biggest in four years, while that of NAND flash decreased by 3 percent. Samsung Electronics Co. saw its operating profit in the semiconductor sector in the fourth quarter of last year fell below 8 trillion won (US$7.19 billion) for the first time in six quarters after the second quarter of 2017 and the price of memory chips plummeted. Accordingly, there is growing concern in the market.
Market research firm DRAMeXchange said on Jan. 31 that the fixed price of DRAM chip (DDR4 8Gb 1Gx8 2133㎒) for PCs was US$6 (6,678 won) per unit on the same day, down 17.24 percent from US$7.25 (8,069 won) at the previous month. The drop in DRAM chip prices reached 27 percent over the past four months. The price of NAND chip (128Gb 16Gx8 MLC) for memory cards also decreased by 3 percent to US$4.52 (5,031 won) per unit. The figure showed a downward trend for two months in a row after 1.69 percent in December last year and it was similar with US$.4.54 (5,053 won) in January last year.
Memory chip prices have plunged as smartphone producers are delaying chip purchases by reason of an increase in inventories and sluggish demand from an economic downturn. In addition, Chinese biggest New Year holidays from February 4 to 10 played a part. DRAMeXchange said, “The key challenge facing the DRAM industry is a large inventory. It shows that the leadership in chip prices is gradually going over from suppliers to demand companies due to a weak demand and uncertain economic outlook.”
Samsung Electronics announced on Jan. 31 that it posted 59.27 trillion won (US$53.25 billion) in sales and 10.80 trillion won (US$9.70 billion) in operating profit in the fourth quarter last year. In particular, its operating profit in the device solutions (DS) division stood at 7.70 trillion won (US$6.92 billion), down 43 percent from the previous quarter. The company also recorded an operating profit of 1.51 trillion won (US$1.36 billion) in the IT and mobile (IM) division, falling below 2 trillion won (US$1.80 billion) for the first time in nine quarters.