Thursday, September 20th 2018
Samsung To Reduce DRAM Output Growth in Favor of Maintaining Prices, Says Bloomberg
In a bid to head off investor worries of a potential downturn, Samsung is looking to tighten their belts in regards to the manufacturing of DRAM. In particular, this move is preempted by the expectation of DRAM bit growth to be less than 20% year-over-year, with bit growth being the key measurement for gauging market demand based on the amount of memory produced. Considering the semiconductor industry is known for its up and down cycles, Samsung's preemptive move could stabilize or even drive up the cost of memory coming out of not just them but Micron and SK Hynix as well. This would help keep their profits rolling in, just in case a downturn in demand does take place, but it also means PC enthusiasts will have to deal with memory prices remaining roughly the same or possibly climb higher going forward.
Anthea Lai, an analyst for Bloomberg Intelligence, in Hong Kong made note that "If Samsung does cut its DRAM bit growth, it shows the company is happy with the current oligopoly market structure." Elaborating further, he said that "It prefers keeping supply tight and prices high, rather than taking market share and risking lower prices, therefore chances for DRAM prices to stay strong is higher."
Morgan Stanley analysts have also predicted a weakening outlook for the server DRAM market which, paired with stalling smartphone sales, shows why investors may be spooked. This is especially true when one considers the market has enjoyed a two-year surge with record profits. What may not be abundantly clear, however, is this reduction in manufacturing also means a possible reduction in R&D investment by Samsung and its rivals. All we can do for now is wait and see how things develop.
Source:
Bloomberg
Anthea Lai, an analyst for Bloomberg Intelligence, in Hong Kong made note that "If Samsung does cut its DRAM bit growth, it shows the company is happy with the current oligopoly market structure." Elaborating further, he said that "It prefers keeping supply tight and prices high, rather than taking market share and risking lower prices, therefore chances for DRAM prices to stay strong is higher."
62 Comments on Samsung To Reduce DRAM Output Growth in Favor of Maintaining Prices, Says Bloomberg
and btw, due to the "capitalism 101" clause, the other mfgr's wont jack up production, simply because they LIKE/WANT/NEED the high prices to remain in effect to bolster their bottom lines, especially going into the holiday season when most (at least in the US) consumers spend way more moolah than they should on stuff they cant afford nor actually NEED.
That way they can put the ram "on sale" for ~10-15% off, to make you think you're getting a good deal, and unfortunately, 90+% of people fall for it too :D
Quite different story, Opec is political, Dram is just companies doing their thing :)
Price fixing is when multiple (competing) companies agree to sell for some price (or prices).
Samsung has just around 50% market share.
Samsung limits production and keeps high prices. There's no implication in either way. They could make twice as much RAM and set even higher prices.
Second: no, this is not "price fixing". A company can make how much they want (can) and ask how much they want.
How do you know which price is "right" aka not too high or too low? Why do you think the price Samsung asks now is too high? Maybe their price is the only proper one? Maybe everyone else are dumping? :)
Third: Samsung has 50% market share. Other manufacturers may still sell their stuff at lower prices. Or they may follow Samsung and get higher margins.
The important fact is: that's still not "price fixing".
For this situation to be illegal, these companies would have to meet unofficially (in conspiracy) and make an agreement that they'll keep the prices high and improve margins. So to prosecute anyone, you'd need a proof of this cooperation. Just the fact that everyone suddenly sells stuff for twice as much as they used to is not enough, because this can happen in a legal way as well.
I'm accenting the "conspiracy" element, because it's vital as well. We have institutions and groups that are officially controlling volume and prices on some goods (like OPEC).
Also, most countries have limits on quantity and prices for agricultural products (and other as well).
This is not "price fixing" aka a crime. This is just fixing prices aka improving profits.
In many countries creating cartels like OPEC is illegal. This is also true for the whole EU, so, for example, no EU country would be able to join OPEC.
However, OPEC is not seen as a criminal organisation as such. OPEC's HQ is in Vienna. :)Wrong. Almost everyone will buy RAM at the price it's currently available for.
Sure, a gamer who builds his own rig can delay some decisions. But that's what... few % of the market?
Also, isn't Samsung still the only dependable source of RAM for AMD Ryzen owners (at least those that OC)?
In that case there is a group that won't have a choice.No. They would have to cooperate - meet and decide for how much they'll sell. If Samsung raises prices and everyone else just follow, that is not price fixing.
Just because North Korea does it globally doesn't make it wrong in every single case.
Who will impose these regulations? Korea is the world's supplier of RAM and RAM is vital. You want Korean gov to take control over this business? Seriously?
Or maybe we'll start a global organization that's sole purpose would be to tell those few public companies headquartered in a democratic country, how they should do their business? :-)
Screw it. Let's just bomb them and take whatever is left by force.
But then, honestly, isn't clean water more vital than RAM? So maybe we'll make a global organization that will control how everyone use water and if your favourite supplier isn't charging too much? I guess we can't bomb everyone. Or can we...?
Samsung is a public company, they publish financial statements, forecasts, plans.
They've just literally said: we want to make less RAM, but sell it for more, so that this move doesn't hurt our financial result.
CAN A COMPANY BE ANY MORE TRANSPARENT?
Samsung isn't the only guilty body here. Complacent regulators are just as bad.Yes, and given their history of doing just that, not watching them like a hawk would be a fools errand. It's also probably what's happening, sadly. But you know, that's ok! Because capitalism.