Storage prices plummet: Samsung will reduce production of DDR4 and transfer to DDR5 / LPDDR5 to solve the problem of oversupply

Thanks to CTOnews.com netizen OC_Formula for the clue delivery! CTOnews.com, April 10 news, in the context of the chip downturn led to a plunge in the price of storage products, Samsung Electronics first-quarter operating profit plunged 95.8%, finally can not resist the pressure to announce production cuts. This is the first time that Samsung has made a formal production reduction plan in 25 years since the 1998 financial crisis.

According to South Korea's Central Daily, citing industry insiders, Samsung's production reduction plan focuses on general products represented by DDR4, and the production of the memory product line in Huacheng will be cut by 3 to 6 months.

Sources said that although production capacity has increased (through technical production cuts), total wafer investment has decreased by 5-7% compared with the same period in February and March last year.

Samsung Electronics operates six DRAM production lines in Huacheng and Pingze Park. General products such as DDR4 are mainly produced in Huacheng, while high-end products such as DDR5 and LPDDR5 are mainly produced in Pingze. Kim Dong-won, director of the KB Securities Research Center, predicted: "We will solve the problem of memory oversupply by reducing DDR4-centric production, shifting production to DDR5 and LPDDR5, and increasing the proportion of advanced processes."

TrendForce, a market research company, said in a report in the middle of last month that Samsung's DRAM production (on 12-inch wafers) would fall to 608000 in the second quarter of this year, compared with a 9.25 per cent drop. This figure is expected to fall further as Samsung officially announces production cuts. Industry insiders expect Samsung's DRAM production to fall by 25 to 20 per cent compared with last year.

According to previous CTOnews.com reports, Samsung Electronics expects operating profit of 600 billion won (CTOnews.com Note: currently about 3.132 billion yuan) in the first quarter of 2023, down 95.8% from a year earlier, while sales of 63 trillion won (currently about 328.86 billion yuan), down 19% from a year earlier. Samsung Electronics said it would cut chip production "meaningfully".

Competitors Micron and SK Hynix have previously announced sharp investment cuts, and the chip downturn is expected to last at least until the second half of 2023.