"Afraid Korea Might Restart Production, The Tide Turns"...Taiwan Shaken by Korean Memory Expansion [Taiwan Chip Dispatch]

Concerns Rise over Shrinking "Reflected Benefits" amid Signs of General-purpose DRAM Production Resumption by Korean Firms

Pressure Mounts as DDR5 Transition Accelerates with DDR4 Price Inversion

"Korean Production Strategies Now Determine M

Taiwan's memory semiconductor industry is closely monitoring the shifts in production strategy of Samsung Electronics and SK hynix, keeping its guard up. There is growing concern that the surge in the production of legacy DRAM by Korean companies could quickly erode the "reflected benefits" that Taiwanese firms have been enjoying.

According to the Taiwan Economic Daily News on July 25, the Taiwanese industry is highly alert to the recently announced large-scale capacity expansion plans by Samsung Electronics and SK hynix. Analysts say changes in both companies’ portfolios—especially whether they will restart general-purpose DRAM production lines—will be crucial variables that determine the short-term performance of Taiwanese companies.

Thus far, major Taiwanese DRAM manufacturers such as Nanya Technology, Winbond, and Powerchip have benefited from market shifts. Due to Samsung Electronics, SK hynix, and Micron focusing on high value-added products like high bandwidth memory (HBM) and the newest Double Data Rate 5 (DDR5), there has been a supply gap for general-purpose DRAM like legacy DDR3 and DDR4, allowing Taiwanese firms to fill this gap and enjoy price premiums.

Recently, however, the situation has begun to reverse. The price of DDR4 products has soared due to supply shortages, creating a favorable environment for Korean companies to extend the operation of legacy lines or to increase production. As of now, the spot price of DDR4 is around USD 80 (per 16Gb), more than 60% higher than DDR5 (about USD 50). This is a rare “price reversal” where legacy products are more expensive than newer ones.

If the profitability (margin) of DDR4 continues to remain high, Samsung Electronics and SK hynix have stronger incentives to increase their input into DDR4 production. In fact, as DDR4 prices rose last year, these companies postponed the termination of DDR4 production to 2026. SK hynix took it a step further by temporarily increasing DDR4 production, especially at its Wuxi plant in China. If the expansion of general-purpose DRAM production by these companies materializes, the market gap that Taiwanese firms have monopolized will disappear and their profits will inevitably shrink sharply.

The mid- and long-term expansion plans by both companies are also raising alarms in Taiwan. SK hynix plans to almost double its monthly DRAM production capacity to one million wafers by 2030 from the current 550,000. Samsung Electronics has also moved up the start of operation for key plants at its Yongin Semiconductor Cluster to 2029. According to the Taiwan Economic Daily News, “What matters more than the scale of expansion itself is how much production will increase at existing facilities and which products will be produced in what quantity,” adding, “Line operation strategies have a much bigger impact on the market.”

The declining demand for general-purpose DRAM is another risk for Taiwanese companies. As DDR4 prices outpace DDR5, PC and server manufacturers are accelerating the shift to the more affordable and higher-performing DDR5. While legacy demand may persist for longer in telecom, medical, and automotive sectors due to lengthy verification periods, the wider the price gap grows, the faster the transition to DDR5 is likely to accelerate.

The Taiwan Economic Daily News noted, “If Korean companies both capitalize on price hikes for legacy products by increasing DDR4 supply and set manufacturers simultaneously accelerate the transition to DDR5, the Taiwanese memory industry’s benefit structure could collapse,” adding, “the market position of Taiwanese memory firms can be greatly shaken if Korean companies alter their production strategies.”

Taiwan Economic Daily News = Reporter Zhu Jiazhen / Translated by The Asia Business Daily

※This column is published through a strategic partnership between The Asia Business Daily and Taiwan Economic Daily News.

This content was produced with the assistance of AI translation services.