Samsung plans to reduce its growth in the production of memory chips next year, to keep supplies tight, amid an expected slowdown in demand, all to avoid falling prices.
Samsung will reduce the expansion of its memory manufacturing capacity
The measure would help maintain or boost prices for semiconductors. Samsung now expects growth of less than 20 percent for dynamic random access memory, and a 30 percent increase for NAND flash. Samsung said earlier this year that it expected increases of 20 percent for DRAM and 40 percent for NAND in 2018.
The semiconductor industry is known for its boom and bust cycles, and investors have been increasingly concerned that Samsung and its peers are heading towards a slowdown, as demand softens after years of record profits. If Samsung, the world’s largest producer of Nand and DRAM, cuts production, that can help shore up prices along with SK Hynix Inc. and Micron Technology Inc.
Shares of Samsung Electronics fell less than 1 percent in Seoul. Just a few hours earlier, Micron, the largest US chip maker, gave an earnings forecast that did not meet analysts’ estimates, adding to the concern that a two-year increase in demand for its products is expected. It is fading.
Semiconductors are the biggest and most profitable business for Samsung since it produces chips for its own devices and sells to other smartphone manufacturers. The chip division generated an operating income of 35.2 trillion won (US $ 31.4 billion) in 2017, more than double the previous year, which helped the company’s profits reach a record.