Samsung Reportedly Plans to Lower Memory Chip Growth as Demand Slowdown Looms

Samsung Electronics Co is planning to curb growth in memory chip output next year to keep supplies tight amid an expected slowdown in demand, Bloomberg reported on Thursday, citing people briefed on the matter.

The world's biggest producer of NAND and DRAM chips expects bit growth of less than 20 percent for dynamic random access memory (DRAM) and a 30 percent rise for NAND flash, Bloomberg said.

Bit growth refers to the amount of memory produced and is important for measuring demand.

Samsung, which along with SK Hynix and Micron Technology dominate the supply of DRAM and NAND flash memory chips, said earlier this year it expected increases of 20 percent for DRAM and 40 percent for NAND in 2018.

Samsung did not immediately respond to a request for comment.

The report follows "drought" warning on chip sales from chip-gear maker KLA-Tencor Corp earlier this month that sparked concerns a two-year memory industry super-cycle may be skidding to a halt.

"So many have been worried about a cycle peak but a drop in supply can support pricing. NAND has had too much supply based on Apple pulling back demand and SSDs not catching on as fast as expected," Elazar Advisors analyst Chaim Siegel said.

Rival Micron's shares were 3 percent higher, ahead of its fourth-quarter report after markets close. Western Digital and Seagate Technology were up between 1 percent and 2 percent.

"This news flow will, of course, give a short-term boost to memory companies like Micron and Western Digital," Summit Insights Group analyst Kinngai Chan said.

"We, however, still need to monitor the rate of price declines in both DRAM and NAND in the coming quarters."

© Thomson Reuters 2018