China’s Micron management could spark global chip price war
China’s Micron management could spark global chip price war
2015-7-17 5:03:02
The $80 billion global memory chip industry could be heading for oversupply and a potential price war if a State-backed Chinese entity buys US-based Micron Technology, the world's No.3 memory chip maker.
China's emergence into a global force, squeezing out market share, would shake up an industry dominated by South Korea's Samsung Electronics and SK Hynix, Japan's Toshiba Corp and Micron.
"When a new player enters the market who says it's OK not to make money, no good can come from it," said C.W. Chung, an industry analyst at Nomura, referring to reports of Tsinghua Unigroup Ltd's interest in buying Micron for $23 billion.
It could, though, be good news for those buying smartphones and other mobile devices if cheaper chips are passed downstream.
The global chip industry rides a volatile boom and bust cycle but has seen healthy profit growth in the past couple of years as it consolidated into just a handful of suppliers, keeping a check on supply growth.
Samsung and Hynix together control nearly 70 percent of the market for dynamic random access memory (DRAM) chips, widely used for temporary storage of data on computers and mobile devices. In flash-type memory chips, Samsung and Toshiba control around 53 percent, followed by SanDisk Corp and Micron.
"The bigger worry for the market right now is the risk of market oversupply. Micron hasn't been that aggressive in capital expenditure, but there's greater uncertainty as to what happens after a Chinese buyer takes over," said Jay Yoo, an analyst at Korea Investment. "Capital expenditure could increase, so concerns about that are being reflected."
The supply of DRAM chips ballooned by 89 percent in 2007 when the industry was caught up in huge oversupply as Hynix and Elpida, since bought by Micron, more than doubled their output to squeeze out smaller rivals.
That glut has since eased, and supply grew just 19 percent in 2013.
China has been a key destination for big spending by chip makers, with production increasing in a market that uses around a fifth of the world's memory chips.
Samsung last year began full-scale production at a new $7 billion chip factory in Xi'an, Shaanxi Province, and SK Hynix will next year likely take its cumulative investment in its China plant.
Acquiring Micron's manufacturing technology would be a major advance for China's still modest chip industry.
China is the world's largest consumer and manufacturer of smartphones yet relies heavily on imported chips, particularly high-end processors. In 2013, Chinese demand represented more than half of global semiconductor consumption, worth 917 billion yuan ($147.7 billion).
A Chinese-owned Micron would help China - home to big hardware makers including Lenovo Group and Xiaomi - be less reliant on foreign technologies and increase its bargaining power.
ใครรอได้รอ สงครามราคาชิพกำลังจะเริ่ม ถ้าคองเกรสอนุมัติให้จีนเทคโอเวอร์บริษัท micron ได้
China’s Micron management could spark global chip price war
2015-7-17 5:03:02
The $80 billion global memory chip industry could be heading for oversupply and a potential price war if a State-backed Chinese entity buys US-based Micron Technology, the world's No.3 memory chip maker.
China's emergence into a global force, squeezing out market share, would shake up an industry dominated by South Korea's Samsung Electronics and SK Hynix, Japan's Toshiba Corp and Micron.
"When a new player enters the market who says it's OK not to make money, no good can come from it," said C.W. Chung, an industry analyst at Nomura, referring to reports of Tsinghua Unigroup Ltd's interest in buying Micron for $23 billion.
It could, though, be good news for those buying smartphones and other mobile devices if cheaper chips are passed downstream.
The global chip industry rides a volatile boom and bust cycle but has seen healthy profit growth in the past couple of years as it consolidated into just a handful of suppliers, keeping a check on supply growth.
Samsung and Hynix together control nearly 70 percent of the market for dynamic random access memory (DRAM) chips, widely used for temporary storage of data on computers and mobile devices. In flash-type memory chips, Samsung and Toshiba control around 53 percent, followed by SanDisk Corp and Micron.
"The bigger worry for the market right now is the risk of market oversupply. Micron hasn't been that aggressive in capital expenditure, but there's greater uncertainty as to what happens after a Chinese buyer takes over," said Jay Yoo, an analyst at Korea Investment. "Capital expenditure could increase, so concerns about that are being reflected."
The supply of DRAM chips ballooned by 89 percent in 2007 when the industry was caught up in huge oversupply as Hynix and Elpida, since bought by Micron, more than doubled their output to squeeze out smaller rivals.
That glut has since eased, and supply grew just 19 percent in 2013.
China has been a key destination for big spending by chip makers, with production increasing in a market that uses around a fifth of the world's memory chips.
Samsung last year began full-scale production at a new $7 billion chip factory in Xi'an, Shaanxi Province, and SK Hynix will next year likely take its cumulative investment in its China plant.
Acquiring Micron's manufacturing technology would be a major advance for China's still modest chip industry.
China is the world's largest consumer and manufacturer of smartphones yet relies heavily on imported chips, particularly high-end processors. In 2013, Chinese demand represented more than half of global semiconductor consumption, worth 917 billion yuan ($147.7 billion).
A Chinese-owned Micron would help China - home to big hardware makers including Lenovo Group and Xiaomi - be less reliant on foreign technologies and increase its bargaining power.