1. Introduction
In a recent report from Pulse, we’ve learned that Samsung Electronics is gearing up for a strategic overhaul to revive profitability. Kim Jae-joon, the Executive Vice President of Samsung Electronics, announced during the October 31st financial conference that they intend to make significant changes to their production and pricing strategies. This article delves into the details of Samsung’s plans and their potential impact on the tech industry.
2. Shifting Production Focus
Samsung Electronics has decided to take a bold step by shifting its production focus. The company plans to reduce NAND production while putting more emphasis on DRAM. According to Kim Jae-Joon, “The production reduction in NAND will be on a relatively larger scale than DRAM.” This move signifies a departure from their traditional production approach.
3. Embracing High-Bandwidth Memory (HBM)
Furthermore, Samsung Electronics is entering the High-Bandwidth Memory (HBM) market. Kim Jae-joon stated, “We expect to expand the production of HBM3 and HBM3E. We plan the HBM supply in 2024 will be more than 2.5 times this year.” Samsung Electronics has already secured supply agreements with major customers, underscoring its commitment to this market.
4. Semiconductor Foundry Business Revival
Apart from memory storage, Samsung Electronics is also on a mission to revamp its semiconductor foundry business. Despite suffering a loss of over 500 billion Korean won in the third quarter of this year due to reduced production line utilization, the company has secured its largest single-season order amount. This indicates that they are gearing up for a strong comeback in this sector.
5. Positive Projections
Analysts in the financial investment industry are optimistic about Samsung Electronics’ future performance. DB Financial Investment analyst So Seong-yeon believes that the semiconductor industry’s performance is expected to significantly improve, starting from the fourth quarter of this year. Increased demand, especially in the DRAM segment, is driving this positive outlook.
6. The Pricing Conundrum
The tech industry is no stranger to fluctuating prices, and storage is no exception. Industry insiders have suggested that storage prices are poised to grow quarter by quarter in the coming year. It’s a common industry practice to be optimistic about price increases for an extended period and pessimistic when prices fall. This pattern is predictable, and suppliers often use future forecasts to encourage customers to stock up quickly to avoid rising procurement costs.
7. Storage Price Trends
When we examine the price trends of two major storage categories, NAND Flash and DRAM, we see some interesting patterns. In the third quarter, NAND Flash prices increased, and DRAM followed suit. However, in the fourth quarter, NAND Flash’s price increase is expected to outpace that of DRAM. This is primarily due to the reduction in DRAM production by major manufacturers, which is expected to become evident only in the fourth quarter.
8. Looking Ahead
As we look ahead to the next year, the tech industry is gearing up for double-digit price increases in both DRAM and NAND Flash. While NAND Flash’s price increase started earlier in the fourth quarter of this year, DRAM is expected to catch up as production control measures remain in place. This pricing shift is set to have a profound impact on the technology market, and Samsung Electronics is strategically positioning itself to adapt and thrive.
9. Conclusion
Samsung Electronics is on the verge of a significant transformation, focusing on shifting production, embracing HBM, and reviving its semiconductor foundry business. The company is well-prepared to take on the challenges and opportunities of a rapidly evolving tech industry.
10. FAQs
Samsung Electronics decided to reduce NAND production and emphasize DRAM to adapt to changing market dynamics and enhance profitability.
HBM is a high-speed, high-capacity memory technology. Samsung Electronics is entering this market to expand its presence and cater to growing demand.
Despite recent losses, Samsung Electronics has secured a substantial order, indicating their intention to revive their semiconductor foundry business.
Storage prices tend to fluctuate, with price increases driven by various factors, including market demand and supply considerations.
The pricing trends in NAND Flash and DRAM will have a significant impact on the technology market, influencing product costs and consumer choices.
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