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Samsung's production reduction will focus on DDR4 memory: accelerating destocking, prices may rebound earlier

Update time : 2023-04-13 09:58:54

Previously, Samsung issued a "profit guidance" for the first quarter of 2023, showing a continuous deterioration in operations, with revenue falling 19% year-on-year and profits falling 95.8% year-on-year. This is the worst performance since the 2008 financial crisis. The deterioration of the performance of the storage department was the main reason for the decrease in revenue in the first quarter of 2023. Therefore, Samsung changed its statement of "not reducing production" and stated that "it will adjust the production of storage chips to a meaningful level, and there is sufficient inventory to meet future demand".

Samsung's production reduction began this week, marking the first time in the past 27 years that it has announced a production reduction, changing its "countercyclical" approach. However, it did not specify the production reduction of various types of products. According to DigiTimes, industry insiders have pointed out that Samsung's production reduction is mainly focused on DDR4 to better reduce inventory, which will ultimately affect product prices. Regardless of the method, once the inventory of DDR4 returns to normal levels, prices will rebound.
According to market research institutions, Samsung's order volume decreased by 30% in the first quarter of this year, while DRAM inventory showed explosive growth, exceeding demand for 21 weeks. Samsung's current memory shipping issue is due to its customers also destocking and competitors further lowering prices. Additionally, the significant decline in DRAM and NAND flash memory prices has also made Samsung very passive.
Samsung is the last memory manufacturer to announce production reduction. Due to its large scale, it will have a more obvious impact on the market price. The price of DRAM and NAND flash memory is expected to balance faster. Analysts have stated that once manufacturers and channel distributors resolve inventory issues, memory and SSD prices will rebound, expected to occur as early as the third quarter of this year.

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