Background on Samsung and its Relevance
Samsung Electronics, a leading global manufacturer of semiconductor memory chips, has recently raised prices for some of its memory chips by up to 60% compared to September levels. This significant increase stems from the worldwide competition in building AI-focused data centers, which has led to a shortage of these crucial components.
Price Hike Details
According to two sources familiar with the matter, Samsung delayed the formal announcement of October supply contract prices. Typically, price details are shared monthly. The price hikes affect memory chips primarily used in servers and can also impact the costs of other products like smartphones and computers.
- DDR5 Memory Modules: The 32GB DDR5 memory module contract price rose from $149 in September to $239 in November.
- Other DDR5 Modules: Prices for 16GB and 128GB DDR5 modules increased by approximately 50%, reaching $135 and $1,194 respectively. Prices for 64GB and 96GB DDR5 modules went up by over 30%, as reported by Tobey Gonnerman, president of Fusion Worldwide.
Impact on Industry Players
Major server manufacturers and data center builders are now acknowledging that they will not receive nearly enough products, with Gonnerman stating, “Many are now accepting they won’t get nearly enough products. The premiums being paid are extreme.”
Escalating Tensions and Industry Responses
The price surge may exacerbate tensions for large companies building data infrastructure. It could also lead to increased costs for smartphones and computers that rely on these memory chips. The scarcity has caused panic among some clients, according to industry executives and analysts.
Chinese Chip Manufacturers’ Perspective
The chip shortage has affected even Chinese manufacturers. SMIC, the leading Chinese chipmaker, reported that customers are holding back orders for other chip types due to memory chip scarcity. Xiaomi, a Chinese smartphone manufacturer, warned of increased production costs due to rising prices.
Samsung’s Benefits from the Situation
Although Samsung has lagged behind competitors in advanced AI chips, the current shortage is beneficial for them. The company has gained more pricing power compared to smaller competitors like SK Hynix or Micron in the memory sector, according to Jeff Kim, KB Securities’ head of research.
Future Price Predictions
Ellie Wang, TrendForce analyst, expects Samsung to raise its quarterly contract prices by 40% to 50% from October to December, surpassing the sector’s average forecast of 30%. The strong demand and long-term agreements with suppliers until 2026 or beyond support this expectation.
Key Questions and Answers
- What is the main reason for Samsung’s price increase? The shortage of memory chips due to the global race to build AI data centers.
- Which memory chip types are affected by the price hike? Primarily DDR5 modules used in servers, but also impacting smartphones and computers.
- How much have prices increased for specific memory chip types? The 32GB DDR5 module contract price rose from $149 to $239, while other DDR5 modules saw increases of approximately 50%.
- What is the expected price increase for Samsung’s contracts in the upcoming period? Analysts predict a 40% to 50% increase in contract prices from October to December.
