Inventory is high and the giant plans to reduce production of Samsung's flagship 1TB SSD. 899 yuan is just the beginning

Storage giants have all issued performance warnings, and the industry's winter has arrived, so the prelude to price cuts for memory and SSDs has just begun. NAND flash prices have continued to decline this year, and Samsung, the leader in flash memory, can no longer hold on. SSD prices are also going to fight a price war, for example, the 980 Pro 1TB is only 899 yuan, and the 2TB version is 2099 yuan, etc. Of course, price cuts like this have only just begun, and this is just the beginning.

In recent months, falling prices have led leading memory chip giants such as South Korea's Samsung Electronics Co. and Micron Technology Inc. to issue grim forecasts that fell short of previously lowered profit expectations. Others, fearing a worsening oversupply, have pledged to cut capacity plans. Chip executives and industry analysts believe the price decline will not bottom out or even slow until the middle of next year.

Average contract prices for the two main types of memory, DRAM and NAND flash, fell 15% and 28% from the previous quarter, respectively, between July and September. Taiwan-based TrendForce expects prices for both memory chips to fall quarter by quarter in the fourth quarter and throughout next year as inventories continue to pile up. But the double-digit decline should end in the spring of next year and be flat or at its lowest point by the end of 2023.

On Friday, Samsung, the world's largest memory chip maker, forecast a 32% drop in operating profit for the third quarter, well below analysts' expectations. At the end of September, Samsung's U.S. rival Micron reported a 45% drop in operating profit last quarter and gave a gloomy outlook for this quarter's earnings. South Korea's SK Hynix, the second-largest memory chip maker by revenue, is expected to see operating profit fall by about 40% from the same period last year, according to analyst forecasts from Fact Set.

The entire chip industry boomed in the early years of the pandemic, with surging demand for technology and supply shortages sending prices soaring.

This year, high inflation, rising interest rates and geopolitical tensions have led to an unexpected decline in sales of goods such as personal computers and smartphones, as well as demand for video game equipment, so the PC industry's cold winter has just begun, which may be a good thing for consumers.