Samsung feels effects of DRAM and NAND memory glut

Samsung revenues are still suffering the effects of the global memory glut but demand uplift signs are apparent.

The company today reported DRAM and NAND sales revenues down 34 per cent year-on-year at ($10.44bn for the second 2019 quarter.

Samsung’s overall sales for the quarter were $47.63bn, a 4 per cent fall y/y, with profits of $4.4bn, down 53.3 per cent from $9.57bn a year ago.

The memory products form part of Samsung’s Semiconductor business division. It does not separate out DRAM and NAND product revenues so we have no insight into their relative health.

Samsung said weakness and price declines in the memory chip market persisted as the previous quarter’s inventory reductions by major data centre customers continued to reduce sales, despite a limited recovery in demand.

The company attributed the uptick to data centre customers resuming DRAM purchases and mobile applications adopting higher-capacity product. Price elasticity increased NAND demand across all applications.

Persistent uncertainties

Samsung’s outlook for the second half of the year sees persistent uncertainties in the memory business, although demand is seen growing further as major applications adopt larger capacity product under strong seasonality.

Its memory strategies for the second half are:

  • DRAM: Focus on flexible management of product mix to respond to demand from different applications; enhance technological competitiveness via stable 1ynm ramp up 
  • NAND: Strengthen profitability by mass producing 6th generation (100+ layer 3D NAND) V-NAND and expanding supply of premium products (such as Enterprise SSDs) based on 5th generation (90+ layer 3D NAND) V-NAND.

The company did not mention production capacity cuts, a tactic deployed by South Korean competitor SK hynix.

Samsung did not elaborate on to the ongoing trade dispute between Japan and South Korea which has resulted in restricted supply of chemicals and some equipment needed in semiconductor processing. Possibly these are the persistent uncertainties it sees in the memory business.