The sharp rise in memory prices over the past two years has left many consumers and industry players feeling uneasy. However, by the fourth quarter of 2017, prices began to stabilize and eventually started to decline, with DRAM memory chip prices falling by around 5%. This shift marked a turning point for the industry, signaling the end of a period of rapid price increases.
According to recent forecasts, the growth rate of the DRAM memory market in 2018 is expected to slow down significantly, reaching just 30%—a number that may not satisfy investors who had hoped for a more aggressive 60% increase. The previous year, 2017, was a record-breaker for the industry, as supply and demand imbalances drove prices to unprecedented levels, with the entire DRAM memory sector surpassing $70 billion in annual revenue.
This uncertainty quickly translated into stock market reactions. On January 6, it seemed like a pivotal moment for the industry. Samsung Electronics saw its stock drop by 7.5% within a week, while SK Hynix also fell by 6.2%, reflecting growing concerns among investors.
Despite the recent downturn, demand for DRAM memory remains strong, especially in the smartphone sector. Compared to the second quarter of 2016, mobile phone memory capacity has increased by 38%, while flash memory capacity has jumped by 84%. This indicates that the DRAM industry is unlikely to face a major crash. While 2018 may see slower growth, the overall market is expected to remain stable, with only a shift in the rate of expansion.
Analysts predict that Samsung’s chip division could achieve an operating profit margin of 47% in 2016, a significant jump from 26.5% in the previous year. By 2018, this figure is expected to climb even higher, reaching 55.5%.
Another key insight is that more than 50% of Samsung’s memory chip revenue in 2017 came from the Chinese mainland market, highlighting the region's growing importance in the global semiconductor industry.
To meet rising demand, the DRAM industry is also investing heavily in expanding production capacity. In 2017 alone, total investment reached $10 billion, and by 2019, this expansion is expected to lead to a maximum price drop of 18% for DRAM chips.
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