Poor Earnings Force Samsung To Reduce Production Of DDR4 As Pricing Takes A Rollercoaster Dive

Samsung is doubling down on its DDR4 memory production and the pricing is expected to take a rollercoaster ride in the coming months.

Component prices have plummeted for several months, and companies are feeling the weight of those costs with their operations, especially when trying to make a profit. One company highly affected by this change is Samsung Electronics, which reported a decrease of 96% in operating profit for the first quarter of 2023.

It is reported that Samsung's recent operating loss has not been this low since 2009. In a safe strategic plan for the company, Samsung is reporting to lower its production of DDR4 memory, which will significantly affect Hwaseong Park in South Korea. The company expects the "nerfed" production levels to last for three to six months, reducing the total wafer input by up to 7%.

Market analysts anticipate that Samsung's DRAM memory production will yield a 25% reduction during 2023 while significantly impacting the market. This is mainly part of Samsung being the world's leader in memory, with a market share of 45%.

In August 2022, the company was phasing out its DDR3 line to make room for DDR5 memory in hopes of faster adoption rates. Samsung also reduced the cost of DDR4 and DDR5 memory to swoon consumers to upgrade to the higher price and significantly upgraded memory technology. However, consumers have reported being hesitant over the last few quarters to upgrade to newer tech due to high pricing due to manufacturing being expensive to gather and create new hardware and components. Many companies, including Samsung, have felt the brunt of a lack of sales from customers and clients, and risky strategies have come into play to rebound from negative sales.

When Samsung reduced the cost of DDR3 for customers, they found a more significant adoption rate that is not currently seen in 2022 to 2023. This aggressive strategy is not something Samsung has tried before. In June 2015, the company was reported to have lowered DDR4 modules to increase its market share.

The effect that Samsung had on the marketplace caused several module vendors to feel the negative impact of the company's actions.  OEMs purchased chips directly from Samsung, removing the vendors from the equation. During this time, every manufacturer was transitioning to 20nm slowly due to the high investment expenditures. It is unknown if the six-month period will be enough for Samsung to rebound, but it is recommended to purchase DDR4 while the pricing is more enticing.

News Source: Kuai Technology