Samsung's cut in memory chip production is good news for industry

By Jennifer Ryan
 

Samsung Electronics Co.’s pledge to cut memory chip production has lifted shares of rival manufacturers because the move could potentially ease a supply glut that’s hammered prices across the industry. 
 

Samsung said Friday it would cut production to a “meaningful level” after reporting its smallest profit in more than a decade. Chipmaker Micron Technology Inc. rose about 7% on Monday in New York, while Western Digital Corp. gained almost 8%. 

The post-pandemic slump in demand for consumer electronics, along with broader economic shocks such as rising inflation, have squeezed producers. Samsung had resisted pulling back on production despite the downturn, in part to take market share from competitors like Micron.

The announcement Friday “adds light to the tunnel,” Stifel analyst Brian Chin said in a research note. The move may “help turn around the largest memory supply imbalance in decades.”

Prices of DRAMs — a type of memory used to process data — are expected to fall about 10% in the current quarter, according to according to Gilhyun Baik, an analyst at Yuanta Securities. That follows a roughly 20% slide in the previous three months and a more than 30% drop in the fourth quarter of last year.