According to a Bloomberg report, Samsung is preparing to slow memory chip production for 2019 in anticipation of a drop in demand. The South Korean manufacturer's move is a double-edged sword as it can help keep NAND flash and dynamic random access memory (DRAM) prices or raise prices further.
Earlier this year, Samsung's optimism predicted that the growth of bits for DRAM and NAND would increase by 20% and 40%, respectively from 2018. Bit growth is a term used within the industry to indicate the amount of memory produced. It is an important metric for measuring demand and allows manufacturers to plan their production.
Samsung's latest forecasts look rather gloomy as the company expects DRAM bit growth to increase by less than 20 percent and NAND growth by 30 percent. Therefore, the logical step for Samsung would be to slow down the production of memory chips to limit supply, which could have consequences for consumers.
Samsung is currently the world's largest producer of NAND and DRAM. The company makes memory chips for smartphones, computers and many other devices. Samsung not only manufactures memory chips for its arsenal of devices, but also sells it to other competing smartphone manufacturers. So, it's not hard to see why Samsung takes so much care of its semiconductor business. As a fact, it is the most profitable business for the South Korean manufacturer. Samsung's chip division alone cashed in a record $31.4 billion operating revenue last year, helping to take the company's earnings record to new levels.
So how does this affect the average consumer? If Samsung decides to move on to the decision to reduce production, it is likely that memory prices will continue to remain high in 2019.