The memory market is so volatile that in the early 2000s, several firms including Enron sought to form a DRAM-futures trading market. Samsung, the largest maker of memory chips in the world, this week warned that the chip industry may be in for hard landing by the end of the year.

The market has changed drastically since the first half of the year, Kye Hyun Kyung, head of Samsung’s device solutions division, said yesterday during a rare briefing at the South Korean company’s new chip fab in Pyeongtaek, according to a report by Bloomberg News.

The general perception earlier this year was that the second half of 2022 would be better than the first.

Two of Samsung’s leading competitors, Micron Technology and SK Hynix, have also signaled waning demand. CNBC reported the news out of SK Hynix. The South Korean chipmaker sees H2 server memory chip demand slowing.

While the memory market is known for its sudden and wild price swings, just about every electronics product made contains one or more of these chips. Scaled-back memory demand has implications for other semiconductor products and the interconnect, passive, and electromechanical (IP&E) components that populate printed circuit boards.

Samsung’s chip operations account for roughly $21.8 billion of its $240 billion revenue in 2021. The Pyeongtaek facility is the largest chip-making operation ever built to date, the company said in prepared remarks.

“The Pyeongtaek campus is fast emerging as Samsung’s key manufacturing hub for cutting-edge semiconductors ranging from the world’s smallest 14-nanometer (nm) DRAM and leading-edge V-NAND to sub-5nm logic solutions,” Kyung said in prepared remarks. “Our focus extends beyond manufacturing to encompass all aspects of sustainability, from cultivating a more environmentally friendly workplace to pursuing shared growth with ecosystem partners and surrounding communities.”

Semiconductor manufacturers have announced plans to build about 29 fabs across the globe to better respond to rapidly changing market demand.

Samsung, which has historically invested heavily in advanced chip manufacturing, intends to keep capital expenditures steady, Bloomberg reported.

But flagging sales aren’t the only headwind for Samsung. The U.S. government has demanded that any semiconductor company benefiting from federal grants—part of the recently passed CHIPS Act—refrain from manufacturing chips in China for 10 years. Samsung plans to build a $17 billion chip plant in Taylor, Texas, with construction slated to start later this year.

The U.S. government has also restricted sales of artificial intelligence chips and cutting-edge chip gear to China to hinder the nation’s technological advancement. Samsung, like many electronics companies, sells chips, smartphones, and other products into the massive Chinese market.

The South Korean government is seeking to negotiate the restrictions with U.S. officials.

Market-watcher TrendForce last week revised its 3Q22 NAND Flash wafer contract prices downward—again. Prices were expected to decline 15-20% while chipmakers cut prices to stimulate demand. That estimate is now 30-35%.

“Looking forward to the price of NAND Flash wafers in 4Q22, as manufacturers have already implemented a strategy of maintaining market share at all costs, contract and spot market wafer pricing are facing collapse,” the firm said.

By: DocMemory
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