The quarterly results of major semiconductor companies are in and Intel is no more the largest semiconductor company. Helped by the overheated memory market, Samsung has added more than 5B$ in quarterly revenue in just four quarters. This is more than 27% of all the 18.5B$ semiconductor revenue added from Q2-16 to Q2-17. Even in a favourable market, this is a tremendous gain not seen before in the industry. The revenue gain is larger than the revenue of Samsungs key competitor Micron.
Our research reveals that most of the gains in the memory markets are not founded in shipments of more products but in pricing that is spinning out of control. No significant memory capacity has come online over the next few quarters and although the memory companies have increased their capital investment significantly, it will take time before it has an impact. Memory pricing used to be driven by consumer decisions and price increases were met with lower demand that dampened the increases.
This memory boom cycle is different. Our research shows that the Data Center is now the dominant force in memory pricing. The demand is driven by capital investments of a few cloud companies that will buy what they need irrespective of price. This was also the only market that was able to buy more memory products – all other areas received lower shipments even though revenue increased. The Smartphone and PC markets are shutting down and it will impact companies that sell other semiconductor products to these end markets.
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