Samsung plans to reduce RAM production to avoid falling prices according to Bloomberg

The semiconductor industry moves on the basis of explosion and contraction cycles, something that users who assemble their own computers are very familiar with. However, when prices fall, it is not usually because the manufacturers want it, but it is due to factors such as a possible reduction in demand that leaves them with an excess of inventory. This is a situation that Samsung wants to avoid. 

The South Korean firm, currently the world’s largest semiconductor maker , is planning according to Bloomberg reduce the production of its RAM chips in anticipation of lower demand in 2019. The purpose is simply to “help maintain or increase” prices, working under the expectation that RAM sales will grow less than 20% during next year. The NAND chips, used in the SSD units, should register a growth of 30%. 

Although positive, these figures are significantly lower than those advanced at the beginning of the year, when Samsung expected increases of 20% and 40%, respectively. 

This situation is not exactly what is said new. About a year ago the main RAM manufacturers made adjustments in their production lines with the same purpose, which has resulted in a stagnation (and even rise) of prices throughout 2018. The issue is that it is a market essentially dominated by three companies, Samsung, SK Hynix and Micron, none of which seems to be particularly interested in a price war. Unlike. 

According to a Bloomberg analyst, “if Samsung reduces the growth of its DRAM, it shows that the company is happy with the current oligopolistic structure of the market, preferring to keep the supply tight and prices high rather than increasing its market share and risking reduce prices, so the chances of continued DRAM prices are higher than before. “