Samsung Cuts DDR3 Production, DDR4 Prices to Push Customers to New DRAM Technology

In short: DDR3 is on the verge of extinction, although demand will take years to die out. In the future, DDR3 modules will become more and more expensive, but the good news is that DDR4 and DDR5 products are getting cheaper with each passing month.

Last year, DDR3 memory supply was already shrinking and profit margins remained slim, so it should come as no surprise that manufacturers are looking to phase them out in favor of newer variants like DDR4 and DDR5.

Earlier this year, Samsung and SK Hynix were the first to announce that they would cease DDR3 production in the coming months, while companies like Micron and specialty DRAM manufacturers like Nanya Technology, Elite Semiconductor Memory Technology, Etron Technology and Winbond Electronics have assured their customers that they will continue to do more for the foreseeable future.

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With the drop in demand for DDR3, Samsung is reportedly slashing production, even compared to last year. Industry insiders believe the Korean tech giant will stop accepting new DDR3 memory orders by the end of this year and fulfill them all by the end of 2023.

This decision will mainly affect devices such as routers, wireless access points, switches, modems and set-top boxes, where manufacturers have been using relatively inexpensive 1GB, 2GB and 4GB DDR3 modules for years. . Some low-end laptops and tablets also incorporate these modules, but they have become extremely rare in recent years.

Samsung wants to push its customers towards DDR4 chips by offering discounts on popular capacities like 4GB. It’s too early to say whether this will translate to lower prices for consumers as well, but the overall market cooling has recently exerted significant downward pressure on DRAM prices.

According to market analysts at Trend Force, the industry is currently facing a DRAM supply glut and is desperate to get rid of excess inventory, even if it means sacrificing up to 18% in price.

For Samsung, memory sales account for more than half of its overall revenue, so it makes sense to focus only on DDR4 and DDR5 DRAMs where profit margins are higher. The company’s profits increased in the first six months of 2022 and even hit a record $58.9 billion in Q2, but the trend is expected to reverse in the coming quarters.

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