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The historic collapse of the storage industry has hit memory enterprises

Feb 02 285

According to Bloomberg, the memory chip industry, known for its boom and bust cycles, has changed its way. "The new market of more strict management and products, namely 5G technology and cloud services, will ensure that the company can achieve more predictable profits." Less than a year after the memory company made such a statement, the industry with a value of 160 billion dollars is suffering one of the most serious setbacks in history: excess inventory of chips, customers reducing orders, and product prices plummeting.

According to the report, this unprecedented crisis not only exhausted the funds of industry leaders SK Hynix and Micron Technology, but also shook the suppliers of these companies, weakened the Asian economies that rely on technology exports, and forced a few remaining memory manufacturers to form alliances, or even to form alliances to consider mergers.

Every chip produced by Samsung Electronics and its competitors is losing money. Their collective operating losses this year are expected to reach a record $5 billion. Inventory has more than doubled, reaching a record supply of three to four months.

However, Samsung is still the only memory company that has not been affected in general. This is due to its huge and diversified business, but its semiconductor division will also move towards loss. Samsung will release its fourth quarter financial report on Tuesday, and then hold a conference call. Analysts may question its capacity management plan.

Meguiar, an American memory chip manufacturer, said at the end of last month that in addition to reducing production, it would also cut the budget for new plants and equipment. CEO Sanjay Mehrotra said that the speed of industry development will depend on the speed of similar actions taken by the company's peers.

In addition, SK Hynix also reduced investment and production. The company's excess inventory is partly due to its acquisition of Intel's flash memory business, which was reached before the industry recession.

There have been mergers and acquisitions in the memory industry during the past economic downturn, and this time is no exception. People familiar with the matter said this month that the transaction negotiation between NAND manufacturer Western Data and Armor is making progress.