Samsung Intends To Reduce Production Of DRAM Memory

-Samsung Significantly Reduces Memory Production Amid Low Market Demand

I,Investors looking at a potential investment in Micron today should pay special attention to the fine print here. According to Deutsche
Bank, Samsung intends to reduce production of DRAM memory while leaving NAND flash production levels mostly intact. According
to data from businessquant.com, this is especially good news for Micron, which gets 63% of its money from DRAM sales and only 31%
from NAND, such that it should benefit disproportionately from Samsung's cuts.

II,Samsung was the only major memory maker that did not cut the output of DRAM and 3D NAND when demand for these commodity ICs dropped due to softening of PC and smartphone sales last year. But as the company's profits plummeted in Q1 2023, it decided to reduce memory production to balance the supply and demand situation on the market.

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According to DigiTimes, Samsung announced severe cuts to its memory chip production due to decreased market demand. As a result, DDR4 prices are expected to stay low temporarily as Samsung cuts NAND and memory output to reduce inventory overhead and match market demand. However, DDR4 prices are expected to rebound once the overloaded inventory is depleted.

Samsung did not confirm whether its memory production cuts are related to DDR4; however, according to DigiTimes, most market observers believe the cuts will focus on DDR4. Either way, it will affect Samsung's memory output significantly. For perspective, this is the first production reduction announcement Samsung has made in 27 years.

Sources with IC testing houses said Samsung saw a whopping 30% drop in orders in just the first quarter of this year. At the same time, DRAM inventory has exploded, exceeding demand by 21 weeks.