With DRAM chip prices continuing to fall sharply, market analysts have downgraded earnings outlooks for Samsung Electronics and SK Hynix, the world's two top memory chip makers.

According to the DRAMeXchange exchange, the spot price of an 8GB DDR4 chip for computers fell to $1.35 in November, marking a 35.7% drop from $2.1 in July. From September to November, it recorded the deepest drop of the year, 20.59%.

Chinese chips
CXMT's LPDDR5 DRAM chip product. Photo: CXMT

DRAM prices will continue to fall further than expected through the end of this year and into early next year, said researcher Park Yoo Ak of ​​Kiwoom Securities.

Chinese companies like CXMT and JHICC are selling products at low prices, while chip inventories are rising due to the slowing smartphone market.

From Q4/2024 to Q2/2025, supply growth is expected to exceed demand as suppliers ramp up DRAM production and CXMT increases shipments.

CXMT and JHICC are flooding the market with large quantities of 8GB DDR4 DRAM chips priced from $0.75 to $1, half the price of Korean and American competitors. Combined with slow growth in the technology equipment market, it pushes DRAM prices down.

Since its establishment in 2016, CXMT has steadily expanded to become the largest DRAM manufacturer in mainland China in less than 10 years. The company currently accounts for about 5% of the global memory market.

The glut of DDR4 chips also affected DDR5 prices. The price of a 16GB DDR5 chip for computers fell 3.7% from $4.05 in October to $3.90 in November. That’s a 16.1% drop from $4.65 in July.

According to research firm TrendForce, CXMT's aggressive increase in DRAM production will negatively impact the revenue and profits of Korean chipmakers.

Analysts expect Samsung Electronics to see a 33 percent drop in operating profit to 9.7 trillion won, while SK Hynix is ​​expected to see a 5 percent drop to 8.09 trillion won.

Since CXMT is not on the US list of banned exports of advanced chip manufacturing equipment, the company will continue to expand.

Han Dong Hee, an analyst at SK Securities, commented that the “bottom” of the chip market could come in the first quarter of 2025.

(According to Korea Herald)