It's kind of awkward to see that the Chinese government is involved in this and needs to be involved in this, but hey it's a good thing. The DRAMeXchange reports that Samsung and the Chinese government will be signing a 'memorandum of understanding', to protect dram prices, and to keep them within acceptable ranges pricing wise.
As you guys all know, Dram products like graphics memory, but also DDR4 memory for your PC have sky-rocketed compared to roughly two years ago. in the example below you can see precisely that, it's a Ripjaws DDR4 kit (16GB) which could be purchased for 75 EUR/USD back in 2015. That same kit now sells for almost 190 EUR/USD.
The Chinese government regulated NDRC prior to the new year announced an investigation. The NDRC is responsible, among other things, for macroeconomic management, under the Chinese State Council. Since a lot of stuff with a chip fabbed in it is basically manufactured in China, here is where that dram shortage is felt the most (Chinese companies that require DRAM to fan computer parts), ergo the increased dram prices could have a long-term effect on the Asia region economy.
This is why the NDRC is now proactively intervening. Samsung is one of the bigger dram producing and utilizing companies, so should be signing that memorandum of understanding between the two parties. The agreement covers an increased dram production, with hopefully the effect of lower prices. We can only hope that more parties will join up in this process.
-- DRAMeXchange --
NDRC and Samsung Are Said to Be Signing MOU, which Could Moderate DRAM Price Rises and Accelerate Production Capacity Expansion, Says TrendForce
The climbing prices of DRAM over the past six quarters have added the cost pressures of Chinese smartphone brands. As the result, China’s National Development and Reform Commission (NDRC) has expressed concerns to Samsung at the end of 2017. And the intervention is expected to moderate the price increases of mobile DRAM in 1Q18, according to DRAMeXchange, a research division of TrendForce. It is said that Samsung Electronics, backed by the Korean government, is signing a memorandum of understanding (MOU) with NDRC. The MOU is believed to include details of further cooperation in the semiconductor industry, such as expanding the investment in China and technical collaboration.
In recent years, China remains the largest importer of memory chips driven by its domestic and export demands. Therefore, Samsung has to show respect and give a response to the opinions of China. According to Avril Wu, research director of DRAMeXchange, the MOU to be signed may influence the global memory market in the following two aspects.
1. DRAM still faces a tight supply, but the price growth will be moderated
On one hand, for memory products suppliers, current profit of mobile DRAM is much lower than that of other products. Affected by the sluggish demand of smartphones in 1Q18 and the intervention by NDRC, the price growth is expected to be limited. For the future, suppliers may continue to shift their existing production capacity from mobile DRAM to other products with higher gross margin, resulting in fewer price increases of other products as well.
2. Suppliers have a higher possibility to expand production capacity to moderate price increase
On the other hand, in the sector of NAND Flash, the portion of 3D NAND Flash in suppliers’ product mix will continue to increase, which has largely eased the tight supply compared with last year. However, in terms of a DRAM, new bit output has not been available yet, resulting in ongoing undersupply. DRAMeXchange notes that suppliers may be more active in production capacity expansion in the condition that Chinese government intervenes in pricing and suppliers find it hard to lower the costs. Increasing the bit output by production capacity expansion will not only stabilize the price but also allow suppliers to maintain the absolute amount of profit of DRAM products.
Samsung and Chinese government likely to sign agreement in effort the lower DRAM prices
