The tide seems to be turning for NAND Flash, but recovery is still not on the cards for the DRAM industry, according to Samsung Electronics.
“As of the end of the second quarter, the DRAM inventory is where it was a quarter ago, but we do believe things will get better,” said Jeon Se-won, vice president of Samsung Electronics’ memory business on July 31 in a conference call following the firm’s earnings report.
With purchases picking up in the second quarter, he expected demand to pick up steam in the latter half of the year, which is traditionally the up season.
Memory chip prices have been falling on a supply glut, causing inventory to pile up. The price decline may deepen if the situation stays unchanged, according to industry experts.
According to market research firm DRAM eXchange on July 31, the fixed trading price of DDR4 8Gb was $2.94 in July, down 11.2% to from June. Compared to the peak price of $8.19 in September last year, it was down by 64%.
NAND Flash prices, on the other hand, have been recovery on a number of factors including the power outage at Toshiba’s memory chip plant in June, and volume adjustments from suppliers.
The DRAM eXchange data also showed that the 128Gb MLC NAND Flash product prices stood at $4.01 as of the end of July, up 2% from a month earlier. Such a rise was seen for the first time in two years in August of 2017.
“With prices seen to be bottoming out, demand has been growing since the second quarter, and a lot of the inventory has been used,” said Jeon of Samsung.
Should rival suppliers begin to cut production, inventory will become more or less normalized by the third quarter, with both prices and market conditions stabilizing, he added.
The executive stressed that Samsung would not “intentionally” reduce memory wafer input, but said the lines would be operated flexibly according to demand.
Experts interpret this to mean that Samsung would be reducing volume to the extent of keeping the memory chip-making running.
On this day, Samsung Electronics said its semiconductor business logged sales of 16.09 trillion won ($13.5 billion) in Q2, while operating profit stood at 3.4 trillion won. Compared to last year, sales and operating profit tumbled 27% and 70%, respectively.
From the previous sector, sales rose 11%, but operating profit slipped 17%. It was also the lowest since the fourth quarter of 2016.
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