Samsung and SK Hynix halt expansion plans to prevent SSD and memory price drop

[Master Disaster]

2 minutes ago, noobadin said:

I really don't see what the problem is. You can't expect companies to keep expanding production when the market isn't there for said production. 

Evidence the market isn't there?

[DeScruff]

I keep seeing in this thread skepticism on the DRAM shortage of the past few years.

Why are you skeptical about that and not their claims that there is low demand?

 

They claim they are 'Meeting demand' but I can sell bread in Venezuela for 200 USD per loaf, selling only 5 loaves a day and say "I'm meeting demand for loaves of bread so there is no reason to make more per day!" - and be technically in business speak be 100% correct. Even though we all obviously know actual demand is higher.

 

[Tech Enthusiast]

1 hour ago, Master Disaster said:

Evidence the market isn't there?

Law that forces companies to expand faster than they want?

[mr moose]

2 hours ago, Master Disaster said:

Evidence the market isn't there?

There have been a few articles talking about oversupply for a few months now.   It's definitely happening. 

Some of these articles are from Jan.

 

https://www.gamerevolution.com/news/419493-ram-prices-drop-gpu-memory

https://digiworthy.com/2018/07/30/ram-prices-drop-2019/

https://epsnews.com/2018/07/11/nand-flash-prices-drop-again-capacity-plans-could-lead-to-oversupply/

https://www.pcgamer.com/memory-chip-price-drop-could-lead-to-cheaper-ram-in-2018/

[Sakkura]

4 hours ago, S w a t s o n said:

2012 was normal, 2013 was normal until the fab fire. 2014 was NOT normal. $180 for 16GB of DDR3 was never normal

Memory tends to have cyclical pricing. You can't just claim the bottom of the cycle is the norm.

 

3 hours ago, Ryan_Vickers said:

SSD prices actually are noticeably at an all time low and still falling so that makes sense but RAM is still greatly inflated and yet they are planning to cut back on that even more!?  WHAT?

NAND bit production has a faster natural growth rate than DRAM does. So in the long term you should expect the price per GB of NAND to drop at a faster rate than it does for DRAM.

[vanished]

3 minutes ago, Sakkura said:

NAND bit production has a faster natural growth rate than DRAM does. So in the long term you should expect the price per GB of NAND to drop at a faster rate than it does for DRAM.

DRAM's not even going down though... it was for a while there but over the last while it's gone back up to almost 2014 levels.  There wouldn't be law firms starting class action lawsuits if it was on a normal trajectory.

[S w a t s o n]

14 minutes ago, Sakkura said:

Memory tends to have cyclical pricing. You can't just claim the bottom of the cycle is the norm.

 

NAND bit production has a faster natural growth rate than DRAM does. So in the long term you should expect the price per GB of NAND to drop at a faster rate than it does for DRAM.

Yea the cyclical nature is due to technology maturation, as each generation gets older the price goes down which is 100% expected and natural, it rises a bit after the next generation comes out due to lower supply as fabs switch over. The 2012 pricing was the correct pricing before it got thrown for a loop.

DDR3 should be more expensive now than it was in 2012 naturally but not as much as it is currently and that's even after the market corrected a bit. DDR4 pricing should be nosediving but we have a worldwide dram shortage to thank for the current pricing. The sudden about face from undersupply to oversupply is a joke. If RAM prices were where they should be sales would be higher and therefore demand would be up.

[Wh0_Am_1]

6 hours ago, asus killer said:

it is if they "both reportedly slimming down their expansion plans for DRAM and NAND chip production" at the same time. That is the exact definition

Only if they agree to do so, but who says that they did? The article didn't mention it, if people stopped buying cars tomorrow, would it not make sense for all the car manufacturers to stop producing cars at the same time?

[asus killer]

18 minutes ago, Wh0_Am_1 said:

Only if they agree to do so, but who says that they did? The article didn't mention it, if people stopped buying cars tomorrow, would it not make sense for all the car manufacturers to stop producing cars at the same time?

let's just ignore this was a active conversation and 5 replies later i quoted the FTC definition of price fixing that clearly disagrees with you. Who well you now internet. 

This could only be more perfect if you said they had to sit at a table, we would achieve perfect craziness.

[Drak3]

1 hour ago, Ryan_Vickers said:

There wouldn't be law firms starting class action lawsuits if it was on a normal trajectory.

There would be if enough people were making claims of price fixing.

[mr moose]

1 hour ago, S w a t s o n said:

The sudden about face from undersupply to oversupply is a joke.

It wasn't sudden, people have been reporting a drop in demand since last year and reports that Samsung alone would hit a 30% drop in sales by the end of this year if it kept going. 

 

1 hour ago, asus killer said:

let's just ignore this was a active conversation and 5 replies later i quoted the FTC definition of price fixing that clearly disagrees with you. Who well you now internet. 

This could only be more perfect if you said they had to sit at a table, we would achieve perfect craziness.

For price fixing to be the case you have to establish that both companies entered into an agreement with each other to unnecessarily decrease production.  That collusion is not established while there is plenty of evidence that a reduction in production is warranted on the grounds of diminished demand.  

[ZacoAttaco]

Wow Samsung is really a stingy company behind the scenes...but let's be honest what huge conglomerate technology multinational isn't these days.

[asus killer]

6 hours ago, mr moose said:

It wasn't sudden, people have been reporting a drop in demand since last year and reports that Samsung alone would hit a 30% drop in sales by the end of this year if it kept going. 

 

For price fixing to be the case you have to establish that both companies entered into an agreement with each other to unnecessarily decrease production.  That collusion is not established while there is plenty of evidence that a reduction in production is warranted on the grounds of diminished demand.  

there is no demand for DRAM? really!  I sure don't want to spend 100$ for 8gb. That might have something to do with the artificially high prices, do you think.

They boht are deciding to decrease production at the same time when they are investigated for price fixing and you tell me the problem is demand. Makes all the sense in the world of course. Besides how the market works is if one decides to decrease production someone else keeps it and cash in, that is how free market works, if they both decide at the same time to stop production, that's price fixing.

 

[mr moose]

3 minutes ago, asus killer said:

there is no demand for DRAM? really!  I sure don't want to spend 100$ for 8gb. That might have something to do with the artificially high prices, do you think.

They boht are deciding to decrease production at the same time when they are investigated for price fixing and you tell me the problem is demand. Makes all the sense in the world of course. Besides how the market works is if one decides to decrease production someone else keeps it and cash in, that is how free market works, if they both decide at the same time to stop production, that's price fixing.

 

That doesn't mean price fixing.  That just means your not accounting for the entire market or it's conditions. 

 

Somethings that you may have not considered:

 

Micron have increased production adding to the change in supply condition

Chinese company Fujian Jin Hua Integrated Circuit and Innotron Memory have started producing adding to the supply (likely supplying to a lot of the cheaper phones revealing pressure almost instantly of the market).

Samsung is gearing up 10nm production for next year and already has 3nm fabs planned for producing in 2020. 

 

Seriously, looking at the news as it is and concluding price fixing is like looking at the state of windows updates and conducing MS want everyone to shift to Linux.

 

 

[Guest]

12 hours ago, Ryan_Vickers said:

SSD prices actually are noticeably at an all time low and still falling so that makes sense but RAM is still greatly inflated and yet they are planning to cut back on that even more!?  WHAT?

Been searching for Tim's bag of tricks to make them trillion-dollar companies. 

[Froody129]

7 hours ago, ZacoAttaco said:

Wow Samsung is really a stingy company behind the scenes...but let's be honest what huge conglomerate technology multinational isn't these days.

It's almost like they're trying to make money! 

 

Tbh I think the demand drop is due to the higher prices. 

[mr moose]

2 hours ago, Froody129 said:

Tbh I think the demand drop is due to the higher prices. 

at the end consumer side for sure (I know I haven't upgraded mostly due to ram/GPU prices), but the rest of it is due to new manufacturers and micron increasing production.   Samsung have lost market share.

[Tech Enthusiast]

4 hours ago, asus killer said:

if they both decide at the same time to stop production, that's price fixing.

 

You have not explained how that is possible.

A reduced demand means all companies NATURALLY reduce production. And they don't even do that now, they just slow down on EXPANSION. 

 

By that super broad definition everything companies do is price fixing. Don't you see that problem?

 

The most pressing question I have is still this: How can this extremely broad definition work, at all. Not all companies are involved, they don't reduce production, they don't have any financial gain from this. By the same definition, every company would be sued for price fixing because they reduce production due to overstock, which happens daily, somewhere. So they would be sued for trying not to burn money. Which is totally absurd. And in this example we are not even talking about reduced production, just reduced expansion,...

so sue them for what? For not spending the money like we want them to? Do you still not see the problem here?!

 

And we did not even include the fact that two companies trying this would only lose their customers to the other companies on the market. Still don't see a problem?

[Daiyus]

I can imagine the demand for DRAM is dropping... because nobody is buying at at these insane prices. The inflated prices of the last few years becoming normal was always my worry. Now they're saying that there's no demand so they won't ramp up production which kills any hope of the price ever dropping. Something is going to have to give out here, time will tell whether consumers give in to the pricing or the manufacturers price everybody out of the market.

[Brooksie359]

23 hours ago, Tech Enthusiast said:

To use your word: For the love of god, how does slowing down expansion do that?! By that logic, everything a company does or does not do is price fixing.

You also forgot that for price fixing to be a thing, the prices actually need to be fixed. Are they? Are they identical between the two? Both answers are a big fat no.

Actually not really. "Illegal price fixing occurs whenever two or more competitors agree to take actions that have the effect of raising, lowering or stabilizing the price of any product or service without any legitimate justification. " that is what the FTC defines price fixing as. 

It doesn't have to be fixed to be considered price fixing. Now the real thing that would determine if it was price fixing is if there is a legitimate oversupply. Because if there isn't then yeah they might be in some trouble. 

[jagdtigger]

9 hours ago, mr moose said:

That doesn't mean price fixing.

NAND & RAM prices dropping > 2 company agrees to artificially limit supply. If this isnt price fixing IDK what is. I know several ppl who like me waits for DDR4 prices to come down to earth along with cheap huge capacity SSD's.....

[Tech Enthusiast]

32 minutes ago, Brooksie359 said:

Actually not really. "Illegal price fixing occurs whenever two or more competitors agree to take actions that have the effect of raising, lowering or stabilizing the price of any product or service without any legitimate justification. " that is what the FTC defines price fixing as. 

It doesn't have to be fixed to be considered price fixing. Now the real thing that would determine if it was price fixing is if there is a legitimate oversupply. Because if there isn't then yeah they might be in some trouble. 

The FTC is pretty dumb if that is even remotely true.

You could sue every single company on the planet, for every single thing they do with that broad statement. So it is either wrong or another example of US laws not making much sense.

[Brooksie359]

1 minute ago, Tech Enthusiast said:

The FTC is pretty dumb if that is even remotely true.

You could sue every single company on the planet, for every single thing they do with that broad statement. So it is either wrong or another example of US laws not making much sense.

Did you see the part where it says "without legitimate justification"?

[Tech Enthusiast]

1 minute ago, Brooksie359 said:

Did you see the part where it says "without legitimate justification"?

Yeah, and who the hell is gonna check that for everything any company does?

If two local shops in your neighborhood decide to reduce their stock. That could qualify as price fixing by that definition.

If two car manufacturer reduces production, it is qualified for a price-fixing suit.

If two restaurants decide to only use mozzarella over cheap cheese, that qualifies for price fixing.

 

Those examples are beyond dumb and still qualify for that definition. That is the issue I have. But I am quite certain now that the issue/misunderstanding comes from US laws vs rest of the world laws. Kinda like always. The definition is not even remotely that for Europe. The courts would never stop working on deciding if those pizza restaurants have a legitimate reason to use mozzarella. And stopping expanding is certainly nothing an EU court would even look at. It is their money, their future. If they choose not to get bigger, it is their right. We don't have laws that force companies to do our bidding, or laws that we can use to force them to do our bidding. No matter how you spin it. ;-)

[Brooksie359]

4 minutes ago, Tech Enthusiast said:

Yeah, and who the hell is gonna check that for everything any company does?

If two local shops in your neighborhood decide to reduce their stock. That could qualify as price fixing by that definition.

If two car manufacturer reduces production, it is qualified for a price-fixing suit.

If two restaurants decide to only use mozzarella over cheap cheese, that qualifies for price fixing.

 

Those examples are beyond dumb and still qualify for that definition. That is the issue I have. But I am quite certain now that the issue/misunderstanding comes from US laws vs rest of the world laws. Kinda like always. The definition is not even remotely that for Europe. The courts would never stop working on deciding if those pizza restaurants have a legitimate reason to use mozzarella. And stopping expanding is certainly nothing an EU court would even look at. It is their money, their future. If they choose not to get bigger, it is their right. We don't have laws that force companies to do our bidding, or laws that we can use to force them to do our bidding. No matter how you spin it. ;-)

If is found that the two local shops make an agreement to lower stock increase prices then yeah it's price fixing. They have to have an agreement and have no proper justification by this definition.