Price of memory products surging
Rise pressures Chinese PC firms, phone makers
Prices of China’s tech memory products have surged since the second half of 2016, triggering a rise in domestic PC and mobile phone prices.
The imbalance between supply and demand has contributed to the increase, but experts also suggested that South Korea- based companies, which are the top suppliers in the market, might have deliberately prompted the situation.
“The prices of memory- related products such as solid state disks ( SSD), memory chips and even USB flash disks and flash memory cards have rocketed by around 30 to 40 percent since the second half of 2016,” a Beijing- based member of the IT staff at a subsidiary of Lenovo China surnamed Wang told the Global Times on Wednesday. “In some cases, the price hikes have exceeded 50 percent.”
At Samsung’s Tmall store, a Samsung SSD with a capacity of 128GB currently costs 459 yuan ($ 67.22). But the price was around 300 yuan in 2016, a salesperson at the shop told the Global Times on Wednesday.
“The capacity of the SSD memory that you can buy this year is probably half what you could get for the same price last year,” he said.
His opinion was echoed by three other memory product vendors that the Global Times contacted.
As a result, the soaring memory price has been passed along to downstream firms including laptop and smartphone manufacturers, who have responded by raising their prices as well.
For example, telecom equipment supplier Huawei unveiled its 2017 flagship smartphone, the P10, in April. Prices for the device started at 3,788 yuan, compared with 2,899 yuan for its predecessor last year, the P9.
Similarly, domestic handset makers including Xiaomi, LeEco and Meizu have announced price increases rang- ing from a few dozen yuan to nearly 1,000 yuan for their mobile phones in recent months, according to media reports.
South Korean dominance
One of the reasons behind the price hike is that domestic electronic equipment makers are looking beyond the smartphone and laptop market, and are hoping “to tap the potential of emerging markets such as unmanned aerial vehicles, robotics and other smart devices, which will drive up demand,” said Ma Jihua, an analyst with Beijing Daojing Consultant Co.
It is also “a result of a crimp in the supply of NAND flash, which is a key storage medium for almost all the memory drives in the market,” Wang Yanhui, head of the Shanghai- based Mobile China Alliance, told the Global Times on Wednesday.
“So far, Chinese firms have not acquired the techniques to manufacture NAND flash, and the market is dominated by South Korean and Japanese producers such as Samsung, SK Hynix and Toshiba,” Ma told the Global Times on Wednesday.
Considering that the price surge in NAND flash chips came after the freeze in Sino- South Korean relations in the wake of South Korea’s decision to deploy the US Terminal High- Altitude Area Defense system, it’s hard to “rule out the possibility that the South Kore- an chip- makers are deliberately raising the price,” Wang said.
In May, South Korea’s exports jumped 13.4 percent year- on- year to $ 45 billion, backed by the robust overseas sales of chips and displays, the Yonhap News Agency reported in June, citing South Korea’s ministry of trade industry and energy.
The robust exports were also buoyed by growing demand in China for South Korean high- tech items like semiconductors, the report said.
Experts predicted that high memory prices will persist for about a year, which will “lift South Korea’s export value in China for some time” as China imports huge amounts of memory chips from South Korea.
In addition, in contrast to domestic phone- makers whose revenues are being eroded by the memory price hikes, South Korean firms such as Samsung stand to gain from the scenario, Ma pointed out.
In the first quarter of 2017, Samsung posted operating profit of 9.9 trillion won ($ 8.7 billion), up 48.2 percent year- on- year.
The company’s revenue for the quarter came in at 50.55 trillion won, according to its financial statement released on April 27.
“So far, Chinese firms have not acquired the techniques to manufacture NAND flash, and the market is dominated by South Korean and Japanese producers such as Samsung, SK Hynix and Toshiba.” Analyst with Beijing Daojing Consultant Co