The electronic components industry is at a critical juncture that requires strategic foresight and proactive planning. In the memory market the significant changes, exemplified by the challenges being faced by major manufacturers such as Kioxia, Micron, Samsung, SK Hynix, and Western Digital, underscore the need for all industrial manufacturers to adjust and transform.
The current market dynamics reveal that major memory manufacturers are expected to incur losses in excess of $20 billion in 2023. According to Trendforce, major flash memory manufacturers are grappling with their largest operating losses since 2014, and memory prices are only just beginning to gradually rise.
The failed merger between Western Digital and Kioxia, which aimed to create a rival to Samsung, is a clear consequence of the difficult market situation. Although flash and DRAM memories are on the road to recovery, with price increases expected, challenges persist.
Memory manufacturers have been strategically cutting production because customers have overflowing warehouses and SK Hynix expects flash memory production cuts to last well into the first half of 2024.
This current scenario presents both challenges and opportunities for customers with full warehouses. Although prices are expected to rise, which requires a careful review of purchasing and inventory strategies, there is no need to panic in the immediate term. However, OEMs should consider the long lead times typically required to recover from historical lows in DRAM and NAND capital expenditures of up to 12-18 months.
Furthermore, the large manufacturers that focus on advanced technologies with larger profit margins such as HBM and DDR5, could prioritize high-volume customers, potentially leaving industrial manufacturers in the lurch.
In summary, even if you have a full warehouse at present, you should take a strategic approach to inventory management, thoroughly understand market trends, and plan proactively to avoid production delays later due to long lead times.
It is vital to stay abreast of development because semiconductor usage will continue to grow, driven by digitization and electrification. The road to semiconductor memory, at least for the time being, is undeniably uphill, and careful planning and adaptability are key to sustained success.