Storage giants are abandoning DDR 4

According to foreign media reports, with the advancement of technology and changes in market demand, DDR4 memory is gradually being abandoned by storage giants.

In recent earnings conference calls, storage giants Samsung and SK Hynix both emphasized that they will shift their focus to high-margin, high-end products, and may reduce the production of DRAM and NAND flash memory, especially traditional types of products.

Among them, SK Hynix plans to gradually reduce the proportion of DDR4 production. In the third quarter of this year (2024), the production proportion of DDR4 has dropped from 40% in the second quarter to 30%, and it is planned to further drop to 20% in the fourth quarter.

Samsung is also expected to reduce its DDR4-based production capacity and transfer part of its DDR4 production capacity to the production of advanced products such as DDR5 and LPDDR5.

According to the Korea Economic Daily, South Korea's two largest memory manufacturers, Samsung Electronics and SK Hynix, are significantly reducing the production of traditional memory chips, especially DRAM, as Chinese competitors have significantly increased production, resulting in lower prices. The latter plans to reduce its DDR4 DRAM production capacity to only 20% by the end of this year.

Samsung Electronics and SK Hynix, the world's largest and second-largest memory makers, also plan to expand production of advanced products such as high-bandwidth memory (HBM) and enterprise solid-state drives (eSSDs), the report said.

Dan Nystedt, an independent semiconductor industry analyst, pointed out that in terms of profit results, China's competition will hurt Samsung Electronics more than SK Hynix and Micron. At the same time, those with AI technology will be far ahead of those without relevant technology.

He added that in the past, Samsung and SK might have been able to increase production and lower prices, forcing Chinese companies to close down, but Beijing was willing to bear huge losses to support its own semiconductor industry. Compared with the funds China has invested in semiconductors, the scale of the chip laws in the United States and the European Union is insignificant.

Samsung said in its recent financial report that it plans to reduce the production of traditional DRAM and NAND flash memory. Kim Jae-joon, vice president of Samsung Device Solutions (DS), said, "We are reducing the production of general-purpose DRAM and NAND flash memory to meet the gradually declining market demand."

Industry sources revealed on the 1st that SK Hynix said at a recent investor relations meeting with Goldman Sachs that it would reduce its DDR4 DRAM chip production capacity from 40% in June, 30% in September to 20% by the end of this year.

Samsung and SK's move comes as tech giants such as Google and China's Baidu continue to invest in servers, resulting in stable demand for server DRAM, but stagnant sales of PC DRAM chips. Market research firm TrendForce lowered its fourth-quarter PC DRAM price forecast to flat from a 3% to 8% increase in September.

Industry data shows that server DRAM is booming, with prices rising due to strong demand for AI-driven devices, while PC and smartphone DRAM prices are steadily declining. At the same time, the price gap between traditional DRAM and advanced new products such as HBM is also widening.

The report said that the main reason for the widening price gap is that Chinese memory companies have increased their production of traditional chips such as DDR4 and LPDDR4X. TrendForce pointed out that Chinese memory manufacturers are expected to control 11.8% of the DRAM market by the end of this year, up from 10.1% in the first quarter.

But according to reports, DDR 4 usage is still quite high.

Intel's latest Arrow Lake-S desktop processors and 800 series chipset motherboards only support DDR5 memory, while AMD has already announced that its Ryzen 7000 series processors no longer support DDR4 memory.

However, there is still a large inventory of electronic products that support DDR4 in the market, and the price of DDR5 is still relatively high, making ordinary consumers prefer DDR4 when making choices.

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