For Samsung, the chip can be said of the 'engine' of the entire electronics business. Thanks to the rising prices of DRAM and NAND flash memory, Samsung’s chip rankings also surpassed the oldest Intel’s in the second quarter of last year and’reverse’ in single-quarter profits. ' Apple.
However, for hardware manufacturers, the rising price of chip memory makes them 'distressed'.
'After soaring 40% last year, DRAM prices are still rising from the beginning of the year to the present. Although the rate is less than 10%, it is eroding the profitability of Chinese brand factories that originally had relatively small profit margins. ' Wu Yating, chief analyst at the Semiconductor Research Center of the State Semiconductor Group, told a financial science and technology reporter that a survey of the Big Three shows that the rise in DRAM prices has left downstream companies under pressure.
DRAMeXchange, a research organization, showed that in the first quarter of 2018, the three major manufacturers of memory, Samsung, SK Hynix, and Micron, had a market share of 44.9%, 27.9%, and 22.6% respectively. The combined storage giant's 95.4% share shows that The DRAM market has apparently assumed an oligopolistic pattern. China is the world’s leading consumer of memory chips. Affected by the price increase of memory chips, China imported storage chips of US$88.921 billion in 2017, an increase of 39.56% year-on-year to US$637.14 billion in 2016.
Since last year, companies including mobile phone manufacturers have successively complained about the increase in storage prices. Some media reported that on May 31, the Chinese anti-monopoly agencies had suddenly launched offices for Samsung, Hynix, and Micron in Beijing, Shanghai, and Shenzhen. The investigation marks the official launch of the investigation by the national anti-monopoly agency on the three companies. At present, the three companies have not responded to the outside.
China is the largest storage demand country
The soaring of memory prices in recent years has caused many speculators to earn a lot of money. It is called 'businesses that are more profitable than real estate'. '
From the second quarter of 2016, DRAM (mainly including PC memory, mobile memory, server memory) prices soared, and sales figures were refreshed every quarter. The latest data from IHS Markit shows that the global DRAM output jumped by 2017 %, reaching US$ 72.2 billion, which will be further expanded to 84.4 billion U.S. dollars in 2018, with an annual growth rate of 16.9%. The last time such a grand scene appeared was still 23 years ago.
Wu Yating, chief analyst at the Semiconductor Research Center of the State Semiconductor Group, told reporters that since last year's price soared by 40%, DRAM prices have been rising since the beginning of the year. Although the rate is still less than 10%, the original profit-making space is relatively small. For the Chinese brand factory, it is under no small pressure.
According to the reporter, the cost of storing in mobile phones has reached 25%-35%. At the same time, due to the rapid price hike of memory chips, prices for mobile phones, solid-state hard drives, memory sticks and other products have risen. Among them, crazy Memory is a 300% increase in one year.
In addition, the Chinese market has digested DRAM and NAND globally by as much as 20% and 25%, which is the largest demand for memory.
According to the DRAMeXchange analysis, although China is actively carrying out semiconductor construction projects, it will take at least several quarters to achieve the goals of 'technology independent research and development' and 'stable mass production scale'. The immediate need to solve cost pressures is far-reaching. In addition to the interview with Micron, Samsung Semiconductor, the leading memory manufacturer, was also interviewed by China's National Development and Reform Commission at the beginning of this year. Although there is no evidence that the two events are related, it is enough to show that Official attention to DRAM prices soared.
'At present, we are still in the initial stage of investigation. No specific monopoly case has yet been identified. However, from the perspective of impact, the increase in DRAM prices will continue to be curbed.' Wu Yating told reporters.
'Price Alliance' encounters investigations across the country
The huge increase in DRAM has brought huge profits to these chip giants.
According to the statistics of Micron, Samsung and Hynix, in 2017, the three companies’ semiconductor business revenues in China were US$10.388 billion, US$253.86 billion, US$8.908 billion, and total US$44.68 billion, respectively, which represented a year-on-year growth of US$32.1 billion in FY2016. 39.16%. Its revenue in the first quarter continued to grow. From the financial report, the operating margins of the three major DRAM makers in the first quarter of this year (OP Margin) reached a water level of 50-70%, which is not only the highest in history. Profitability even exceeds that of a higher-level CPU.
In fact, after receiving complaints from mobile phone manufacturers, regulators have started to focus on storage markets that have continued to increase prices last year. At the end of 2017, in May 2018, Chinese anti-trust agencies interviewed Samsung on the issue of continuous price increases. Micron.
The most important reason for the interview was that the price of standard memory has increased for several quarters in a row, which has led to an increasing cost burden for Chinese manufacturers, and the restriction of suppliers of equipment suppliers to Fujian Jinhua is an obstacle to fair competition. The first in 2018 Season Samsung, SK hynix and Micron have a market share of approximately 96% in the DRAM industry. Compared with the semiconductor components used in other end products, it appears that this has become a monopoly condition. Future antitrust investigations may continue to occur in the future. , And may suppress memory gains. ' Wu Yating told reporters.
Wu Yating added that, according to the anti-monopoly investigation, there were precedents in various countries.
From 2005 to 2006, the US Department of Justice had ruled that Samsung, Hynix, Infineon, Elpida, and Micron had a price monopoly between 1999 and 2002 and fined the first four companies for a total of 729 million U.S. dollars by the end of April this year. Samsung Electronics and others suffered a class action lawsuit in the United States and were accused of conspiring to limit the supply of DRAM memory chips.
A lawyer named Hagens Berman filed a class-action lawsuit with Samsung Electronics, Hynix and Micron Technology in the Northern California District Court. The law firm claimed that their investigation revealed that these major DRAM manufacturers colluded with each other and restricted the market. The supply of DRAM products has artificially pushed up DRAM prices. During the class action lawsuit allegedly, the price of DRAM increased by 130%. At the same time, Samsung Electronics, Hynix and Micron Technology's DRAM sales revenue. It has more than doubled.
Wang Yanhui, secretary-general of the China Mobile Alliance, told a financial science and technology reporter that after the NDRC's investigation into Qualcomm’s anti-monopoly, Chinese companies had already understood how to use government power to maintain market equity and also knew how to reflect to the government on the inequities in the market. The anti-monopoly investigation of SAMSUNG by the General Administration of Market Supervision is also a direct response to reports from Chinese companies and industry organizations to the relevant authorities.
'Compared with the European Union, we continuously issued penalties for monopoly reasons from Google, Apple, and Qualcomm. Objectively speaking, due to the limited manpower, China's anti-monopoly institutions are not too intrusive but too small. As the world's largest electronic product The manufacturing base and the second largest market need stronger market surveillance agencies to ensure a fair and just market competition order. 'Wang Yanhui told reporters.