Memory prices might be coming down thanks to China’s talks with Micron

If you’ve been keeping track of the price of memory these days, you’ll be familiar with the insane ramp-up in the costs of DDR4 memory kits and SSDs in the past year and a half. Memory manufacturers like Samsung, SK Hynix and Micron are all having record sales years with enormous profits, and this mimics the time when, 15 years ago, all three memory vendors pleaded guilty to artificially hiking prices and constraining supply to make obscene profits on their memory technology.

To try rein in further increases, the Chinese government’s Ministry of Commerce held a meeting with Micron last week to discuss the pricing issues. China consumes one-fifth of all DRAM memory production globally, and one-fourth of all flash memory globally.

The meeting between Micron and the Ministry of Commerce was reportedly a fact-finding exercise to identify the cause of the price spikes, and for the Chinese Anti-Monopoly Bureau to express their concerns about the impact it has on the market. Micron is an American company, and there are also genuine concerns that the Trump administration may attempt to instigate a trade war with China, which would impact China’s ability to use Micron as a second-source vendor to work around any supply issues.

The meeting with Micron hasn’t resulted in any announcements yet, but it’s expected that there may be some price relief on the horizon, as well as increased production to meet demand. Samsung reportedly also met with the Ministry of Commerce back in early May, when Samsung Electronics vice chairman Lee Jae-yong met with business leaders in Shenzhen, China, as well as meeting with Xiaomi executives to discuss market pressures. The Chinese smartphone market is seeing a rise in the popularity of local brands, while international brands like Samsung and Apple, among others, saw a 31% drop in overall shipments during 2017 due to market pressures.

The Chinese government is, in addition, on a mission to build its own industry of memory manufacturers and factories in China, backed by government funds and essentially trading as publicly owned corporations. It’s been an ongoing project since 2014, with the project running into financial issues several times as companies like Yangtze Memory Technologies worked on their process. If there’s anything that would result in a free-fall in the memory price, Chinese memory vendors finally coming in to the global market would probably do the trick.

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