According to BusinessKorea, memory chip makers such as Micron Technology, SK Hynix and Western Digital have announced that they will cut production as global demand declines. Instead, Samsung Electronics said it would not reduce its memory chip production, but rather respond to the changing market environment by increasing the efficiency of its production lines.
There are two main reasons for Samsung Electronics' decision.
First, it is related to concerns about price monopoly. Major global memory chip makers such as Micron Technology and SK Hynix have announced plans to cut production, and Samsung's non-reduction behavior is seen as a way to stabilize prices.
In fact, the relevant lawsuit is in progress. In April 2018, the US law firm HagensBerman filed a lawsuit in the Northern District of California, claiming that Samsung Electronics, SK Hynix and Micron Technology increased the price of DRAM chips by using 95% of their market share and limited production. The law firm filed a similar lawsuit in 2006, in which the defendant must pay $300 million.
Second, Samsung's decision is based on its technological superiority. Even without deliberately reducing the number of chips, higher levels of microfabrication can result in lower yields. This is because higher levels of microfabrication result in lower yields and require more time for chip production.
In addition, higher levels of microfabrication result in more chip production and more cost effective results at the same wafer input. As global semiconductor prices fall, the cost reduction based on micro-manufacturing becomes increasingly necessary for semiconductor manufacturers.
In terms of cost competitiveness, Samsung Electronics has already occupied a place in the industry. In the second quarter of this year, its semiconductor business unit's operating margin was 21.1%. For reference, the operating profit margin of the unit was 55.1% in the second quarter of 2018, while SK hynix's operating profit margin fell from 53.7% to 9.9%.