SEOUL / LONDON (IT BOLTWISE) – The two largest DRAM manufacturers, Samsung and SK hynix, have decided not to dramatically increase their production to ensure long-term profitability. Despite the ongoing demand for memory chips and rising prices, companies plan to only moderately expand their production capacities in order to avoid oversupply.
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Samsung and SK hynix’s decision not to significantly increase their DRAM production is a strategic move aimed at long-term profitability. Both companies together control over 70% of the global DRAM market and face the challenge of balancing supply and demand. With the current memory shortage expected to last until 2028, RAM module prices have skyrocketed, putting a strain on both consumers and businesses.
Companies have learned from the experience of the COVID-19 pandemic, when demand for memory chips fell dramatically and led to a reduction in production capacity. Now that demand is rising again, particularly due to the hype around artificial intelligence, there is a risk that increasing production capacity too quickly could lead to oversupply once the hype dies down. Therefore, Samsung and SK hynix are pursuing a cautious investment strategy aimed at balanced capital expenditure.
Another aspect of this strategy is the conclusion of short-term contracts with customers in order to be able to reflect price increases more quickly in the offers. This measure is intended to help secure margins and ensure the financial stability of companies. Experts expect the DRAM shortage to continue in the coming quarters, meaning products like RAM and GPUs will continue to suffer from supply shortages.
In the long term, this strategy could help companies consolidate their market position and increase their profitability. While some market observers are calling for an increase in production capacity to meet current demand, Samsung and SK hynix are committed to sustainable development that takes into account both the needs of customers and their own economic interests. This approach could prove beneficial if demand for memory chips continues to rise in the coming years.
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