The sharp rise in memory prices over the past two years has left many consumers and industry players feeling caught off guard. However, by the fourth quarter of 2017, prices began to stabilize and even started to decline, with DRAM chip prices dropping by around 5%. This shift marked a turning point for the industry, signaling a potential slowdown in growth.
According to recent forecasts, the growth rate of the DRAM memory market in 2018 is expected to slow down significantly, hitting just 30%—a far cry from the 60% that investors had hoped for. While a 30% increase might sound impressive, it’s clear that the market was operating under high expectations, especially after a record-breaking year in 2017.
In 2017, the imbalance between supply and demand sent DRAM prices soaring, pushing the entire industry's revenue beyond $70 billion. This surge created a lot of excitement, but also a sense of unease as the market began to show signs of overheating.
This uncertainty quickly translated into stock market reactions. On January 6, the market saw a significant shift, with Samsung Electronics' stock plunging 7.5% within a week and SK Hynix falling by 6.2%. These drops reflected investor concerns about the sustainability of high profits in the memory sector.
Despite the recent downturn, demand for DRAM memory remains strong, particularly in the smartphone sector. Compared to the second quarter of 2016, mobile phone memory capacity has increased by 38%, while flash memory has seen an 84% rise. This continued demand suggests that the DRAM industry is unlikely to face a crash, though the growth rate may slow down in 2018.
Analysts predict that Samsung’s chip division could see its operating profit reach 47% in 2016, a significant jump from the 26.5% recorded the previous year. By 2018, this figure is expected to climb further to 55.5%.
Another key point is that more than 50% of Samsung’s memory chip revenue in 2017 came from the Chinese mainland market, highlighting the growing importance of this region in the global semiconductor industry.
To meet rising demand, the DRAM industry is also expanding its production capacity. In 2017, total investments reached $10 billion, and by 2019, prices are expected to drop by up to 18%.
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