From 2016, the sharp rise in storage prices has been significantly eroding the profits of machine manufacturers across the board. Whether it's DRAM or NAND flash, prices have remained at record highs for over a year, with almost every quarter seeing a surge. For example, Kingston’s 8GB DDR4 2400 memory was priced at just 339 yuan in November 2016. Within a year, its price soared to 969 yuan. Analysts predicted that such price increases would persist through the first quarter of 2018.
This dramatic increase in memory prices has benefited major memory manufacturers. Samsung Electronics, for instance, became the world’s most profitable company in 2017, with an operating profit in the fourth quarter exceeding 60 billion RMB—up 179% year-on-year. South Korea’s Hynix saw its third-quarter basic profit reach about 21.81 billion RMB, a 415% year-on-year increase. Meanwhile, U.S. company Micron Technology reported fourth-quarter revenue of $6.14 billion, up 91% compared to the same period last year and surpassing Wall Street’s forecast of $5.99 billion. While most machine manufacturers struggled, memory producers experienced a rare boom.
The root cause of the rising memory prices lies in supply and demand imbalances. Some blame monopolies or dealers, but the real issue is that production cannot keep up with growing demand. A decade ago, memory was mainly used in PCs and servers, where manufacturers could balance supply and demand by forecasting market needs, keeping prices stable. However, with the maturation of new technologies like mobile devices, cloud computing, AI, IoT, and big data, demand for high-performance memory has surged. In 2016 alone, China produced 1.5 billion smartphones, with 64GB and 128GB memory becoming standard. The expansion of cloud platforms and next-gen data centers further boosted demand for advanced memory solutions.
According to IC Insights, the global DRAM market is expected to grow 75% in 2017, reaching $72 billion, while the NAND Flash market will rise 44% to $49.8 billion. By 2020, the global market is projected to hit $100 billion.
It typically takes 1-2 years for a memory plant to go from construction to production. If demand rises quickly, supply shortages can occur, pushing prices higher. Since 2016, manufacturers have shifted capacity to 3D NAND, reducing production of traditional DRAM and 2D NAND, which has led to widespread shortages.
The rising cost of memory has significantly impacted China’s electronics industry. As the world’s largest integrated circuit market, China’s semiconductor memory market reached 284.3 billion yuan in 2016, accounting for 54.1% of the global share. However, the country still heavily relies on imports. South Korean companies like Samsung and Hynix, along with U.S. firms like Micron, dominate the DRAM and NAND Flash markets, leaving China with zero market share in these areas. Only Zhaoyi Innovation holds a small portion in NOR Flash.
China’s memory imports increased by 47.5% between 2013 and 2016, rising from $46.17 billion to $68.13 billion. By 2017, it was expected to exceed $70 billion. This dependency on foreign suppliers has placed significant pressure on domestic manufacturers. Companies like Xiaomi and Huawei have seen their profits shrink due to rising memory costs, forcing them to raise product prices, ultimately passing the burden to consumers.
The situation is even more challenging in the PC market, which is already struggling. Many consumers are delaying purchases of high-memory devices, and some computer installers report a 20% drop in installed capacity. Internet cafes have also seen a 50% decline in orders. The impact of rising memory prices is felt throughout China’s electronics industry, from manufacturers to retailers and end-users.
Ye Tianchun, director of the Institute of Microelectronics at the Chinese Academy of Sciences, warned at an international summit: “If China fails to develop self-manufactured memory chips in the next 30 years, the so-called information age will lose a critical foundation.â€
To address this challenge, the Chinese government has taken active steps to support the domestic memory industry. The development of local memory chips not only meets China’s massive demand but also strengthens the entire semiconductor supply chain. It also helps reduce reliance on foreign companies and accelerates China’s progress in the semiconductor sector.
The government has elevated the integrated circuit industry to a national strategic priority. President Xi Jinping emphasized the need to concentrate resources and efforts to achieve breakthroughs in key technologies like integrated circuits and core components.
Local governments have also played a role by establishing large investment funds. By mid-2017, the total scale of these funds exceeded 300 billion yuan. Several new wafer fabs have been built in mainland China, and government-backed projects like the Jinhua DRAM project in Fujian and the Xiamen Sanan project have received significant funding.
Major memory companies are also investing heavily in domestic production. Ziguang Guoxin plans to build flash memory facilities with 60 billion yuan in capital. Wuhan Xinxin is investing $24 billion to establish a domestic IC memory base, while Fujian Jinhua is building a memory IC production line with a first-phase investment of 37 billion yuan. In Wuhan, a 160 billion yuan memory base project was launched, aiming to produce 300,000 wafers per month by 2020.
Looking ahead, several Chinese companies are making progress. Yangtze River Storage recently developed 32-layer, 64-GB 3D NAND chips with independent intellectual property rights and plans to mass-produce them in 2018, aiming for 300,000 units per month by 2020. Hefei Changxin is building a 12-inch DRAM fab with $7.2 billion in investment, expecting to start mass production in 2018. Fujian Jinhua’s 12-inch DRAM line is set to begin operations in Q3 2018, with a monthly capacity of 60,000 wafers.
Despite the challenges, the path to localization remains long. Foreign giants like Samsung and Hynix continue to expand their production capacities, and Chinese companies still lag behind in technology and performance. However, with strong government support, focused innovation, and long-term planning, China’s memory industry is well-positioned to become a major player in the future.
20L Agriculture Drone,Agriculture Sprayer Drone,Professional Sprayer Drone,Agriculture Sprayer
Xuzhou Jitian Intelligent Equipment Co. Ltd , https://www.jitianintelligent.com