South Korean chipmakers are expected to expand their production of dynamic random access memory (DRAM) chips despite falling market prices in a bid to cope with the rise of Chinese rivals, industry sources said Wednesday.

The global contract price for a DDR3 4GB module, the standard in setting the price of DRAMs, came to US$16.7 in October, down 9.5 percent from $18.5 posted in September, the data compiled by industry tracker DRAMeXchange showed.

DRAMeXchange, however, said South Korea-based Samsung Electronics Co. and SK hynix Inc. are expected to expand DRAM production to curb the rise of Chinese chipmakers.

Earlier this year, Tsinghua Unigroup of China sought to purchase Micron Inc. but faced challenges from U.S. policymakers, who feared a possible outflow of key technologies.

The move made by the state-owned Chinese firm was seen as Beijing's ambition to make the chip industry its new growth engine, increasing the potential threats for existing players.

The industry tracker said Samsung is expected to commence the 18-nanometer production in 2016 and further widen its gap with other rivals. Samsung currently focuses on 20-nanometer production. A smaller number indicates improved productivity.

SK hynix is also set to begin a full-fledged production of 21-nanometer DRAMs next year, it added.

"Though increasing capacity will result in short-term price fluctuations and even declining profits, this action is necessary to retain market shares and raise the competitive barriers against potential rivals," DRAMeXchange said.

Samsung and SK hynix currently take up more than 70 percent of the global DRAM market, while the U.S. company Micron Technology Inc. boasts around a 20 percent share.

By: DocMemory
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