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Chinese regulator meets Micron: memory prices may go down
On Thursday, representatives of the antimonopoly bureau of the Ministry of Commerce of China met with the leadership of the American company Micron Technology. According to the DRAMeXchange analytical group of the TrendForce trading platform, the meeting discussed the issues of a continuous increase in prices for memory for personal computers. Predictably, Chinese OEMs for PCs and Computing Systems are facing extreme price pressure from rising prices for DRAM chips and modules.
In addition, Micron has become a defendant in the intellectual property infringement case of the Chinese memory manufacturer JHICC. Therefore, the high parties of the meeting had something to discuss. According to the results of the conversation, DRAMeXchange predicts that the price of memory may soon stabilize and even go down.
In Q1 20221, Samsung, SK Hynix and Micron together hold 96% of the DRAM market. This is a real oligopoly, the actions of which should be closely scrutinized by the antimonopoly authorities. At the beginning of the year, the Chinese regulator had already held a preventive conversation with Samsung, and this had a result, since soon the prices for DRAM memory for smartphones stabilized and even began to decline in places. The source does not link the meeting of the regulator with Micron with the previous meeting with Samsung (especially since in each case they were different regulators), but it is also clear that China, which has become the world’s largest consumer of DRAM and NAND, will closely monitor the order in the memory market.
At the same time, prices for PC memory cannot be expected to collapse overnight. The deficit will persist as there is not enough capacity to meet it. This means that demand will exceed supply and prices will go up for some time. For example, the DRAM production cycle exceeds eight weeks (approximately one and a half months), and the introduction of new production lines, given the existing industrial sites, requires a period of about a year with immediate funding. It remains to be hoped that the Chinese regulator will help the top three find hidden reserves for expanding DRAM production. Sometimes it’s enough just to have a conversation.