Reminiscence Loss: Reminiscence Chips, Present in Smartphones and Self-Driving Vehicles, See Dip

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SEOUL—The memory-chip trade’s flushest days look to be over.

After a historic rise in 2017, costs this yr of two main varieties of reminiscence chips—referred to as NAND and DRAM—have fallen 37% and 16%, respectively, in keeping with semiconductor gross sales tracker DRAMeXchange.

The drop helped trigger

Samsung Electronics
Co.

to forecast lower-than-expected revenue for the second quarter. Shares on the earth’s largest smartphone and semiconductor maker slid 2.three% on Friday, after Samsung stated it anticipated second-quarter working income of 14.eight trillion received ($13.2 billion)—a determine under analyst estimates of 15.1 trillion received. The end result would break Samsung’s string of 4 consecutive quarters of record-shattering working income.

Reminiscence chips go in all the pieces from smartphones to internet-connected gentle bulbs to self-driving vehicles. The pullback in pricing displays added provide from producers boosting manufacturing and a sag in smartphone gross sales.

Even so, the trade continues to be wholesome: The price of NAND and DRAM stay comparatively excessive in comparison with their historical past, although large worth positive aspects from 2016 and 2017 look like abating.

“It’s getting again to regular versus the massive shortages we have been in,” stated Randy Abrams, a Taiwan-based analyst for Credit score Suisse.

The chips trade additionally faces some authorized scrutiny as the costs of reminiscence chips have been on the rise. Samsung,

Micron Expertise
Inc.

and

SK Hynix
Inc.

stated final month that Chinese language regulators had visited their places of work lately, a transfer analysts have stated might be linked to DRAM costs.

A U.S. class-action lawsuit makes related claims in opposition to the identical three corporations, alleging the businesses “artificially stabilized and raised the costs of DRAM” from June 2016 to December 2017.

“You’re speaking about billions and billions of dollars of overcharges, and I don’t assume customers ought to should bear that,” stated

Steve Berman,

managing associate of Hagens Berman Sobol Shapiro LLP, whose agency filed the lawsuit in April in a California district court docket.

Samsung, Micron and SK Hynix declined to remark.

Not serving to issues is a slowdown in smartphone gross sales OK?, because the trade is a giant purchaser of reminiscence chips. Customers are holding onto their gadgets longer—and balking at costs nearing $1,000.

World smartphone shipments declined by 2.2% throughout the first 5 months of the yr versus the identical time-frame a yr in the past, pushed by a 10% drop in China—the world’s largest smartphone market—stated Tom Kang, an analyst at Counterpoint Expertise Market Analysis.

That damage Samsung in a number of methods, as gross sales of its new flagship gadget, the Galaxy S9, are anticipated to be weak. However slower smartphone gross sales hindered Samsung’s elements enterprise, too.

On the finish of final yr, the costs of DRAM and NAND, the 2 principal varieties of reminiscence chips, had greater than doubled over the previous two years.

DRAM costs, nevertheless, peaked in January at $Four.90 and have since fallen to $Four.07 in June, in keeping with DRAMeXchange, based mostly on a Four-gigabit common spot worth. Immediately’s worth continues to be greater than double of the place DRAM costs stood in September 2016.

NAND costs have fallen by greater than one-third, although decrease prices may encourage gadget makers to stuff much more reminiscence into smartphones and different devices.

Write to Timothy W. Martin at timothy.martin@wsj.com



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