Samsung Electronics Estimates 56% Jump In Profit

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rgMekanic

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ABC News is reporting that Samsung Electronics is estimating a 56% jump in profit despite sales for oled screens for iPhones being lower. As if you couldn't guess where all the extra profit is from, analysts are claiming the jump is from "strong demand" for memory chips. Sales rose 19%, Samsung did not disclose its net income, but will give the breakdown figures and more details later this month. 56% jump in profit with a 19% jump in sales.. sounds like we're getting around 37% screwed.

Samsung unseated Intel as the world's largest semiconductor maker last year on the back of solid demand for chips that hold data and help run programs faster for servers and phones. Analysts increased their forecasts of Samsung's memory chip profit this year as demand for data centers and servers increased the prices of the memory chips called DRAM.
 
The cry of the Ferengi: "Greed is eternal." When did they take over Samsung?
 
This is the product of extreme virtualization. When you are planning on hosting a large volume of clients you build to the projection meaning you heavily over buy in memory because when it comes to building servers... the least expensive things are memory and storage. CPU = licensing costs. Memory = free performance. High speed storage = free performance. (ok not FREE but marginal compared to 5k a core licensing for other things. )
 
alamox said:
seriously how they are not sued for price fixing is beyond me.
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Because it’s not price fixing nor is it price gouging, it’s simple supply and demand. Read a book before criticizing.


As for 19% sales and 50%+ profit increases, the name of the game in memory is cost reductions which are constantly increasing (Er, costs are constant,y going down). Costs have nothing to do with the price of memory as there have been times companies sell memory at a loss since the supply/demand dynamic dictates prices.
 
Supply and demand is a joke. Larger groups have been buying up smaller makers for years, then manipulating the supply chain to keep demand inflated. Since there are 3 or so big players they can agree to keep prices high. Think they had done this before with 6 groups last time they were investigated and fined. If you search the news archives here you should be able to see it.
 
I have often found myself wondering if any [H] users have a direct relationship with the dram manufacturing industry.

Certainly writing reviews on products and providing a space with focus on the general computer topic is one kind of connection, I was thinking something more direct.
 
Tyns said:
Because it’s not price fixing nor is it price gouging, it’s simple supply and demand. Read a book before criticizing.


As for 19% sales and 50%+ profit increases, the name of the game in memory is cost reductions which are constantly increasing (Er, costs are constant,y going down). Costs have nothing to do with the price of memory as there have been times companies sell memory at a loss since the supply/demand dynamic dictates prices.
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The memory industry has been caught many times price fixing. So when prices are high, one can't help cry foul. Remember, people don't learn, they just find better ways not to get caught. As for why, well it's the timing. DDR4 memory is in demand cause of Ryzen and Intel CPU's. You can't put DDR3 memory in those motherboards, cause if you could you would. Many people expected this to happen with DDR4 cause it happened with DDR3 and DDR2. Usually happens when a factory somewhere catches fire or loses power for a day. Suddenly prices double like if that one factory supplied 50% of the worlds memory.
 
Tyns said:
Because it’s not price fixing nor is it price gouging, it’s simple supply and demand. Read a book before criticizing.


As for 19% sales and 50%+ profit increases, the name of the game in memory is cost reductions which are constantly increasing (Er, costs are constant,y going down). Costs have nothing to do with the price of memory as there have been times companies sell memory at a loss since the supply/demand dynamic dictates prices.
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Yeah, you'd think the other DRAM makers will ramp up production and fill in the demand, so they can earn a profit from all that extra demand, but they never do... do they?
This is what... the 5th time DRAM manufacturers have colluded with each other to fix prices?

It's always like this. The DRAM manufacturers never work out of line with each other.
When one overproduces, they all overproduce.
When one restricts, they all restrict.
Not a single one tries to pick up the slack when production is limited.
And it's not like they can only make inflexible contract orders because many of them own their own fabs.
 
Elf_Boy said:
I have often found myself wondering if any [H] users have a direct relationship with the dram manufacturing industry.QUOTE]

I've designed external ram into many of my products. It is ugly for most medium to small manufacturers of electronics right now. I just got done for the day at 11:30 pm working on redesigning an assembly due to supply constraints. Working all weekend....first world problems. I still want to say F the memory makers F the rest of the supply base I'm sick of this shit.
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Tyns said:
Because it’s not price fixing nor is it price gouging, it’s simple supply and demand. Read a book before criticizing.


As for 19% sales and 50%+ profit increases, the name of the game in memory is cost reductions which are constantly increasing (Er, costs are constant,y going down). Costs have nothing to do with the price of memory as there have been times companies sell memory at a loss since the supply/demand dynamic dictates prices.
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seriously ? supply and demand for over 2 years, with half a year before that to see it coming ?
one needs to be stupid to think this is supply and demande, they don't need to open new fabs to increase production, no fab runs at 100% capacity, beside they don't just produce Dram, they produce other stuff, they can just increase production by using what's free, or diverting from another product, because come on, over 2 years of supply and demand ? seriously ?
 
alamox said:
seriously ? supply and demand for over 2 years, with half a year before that to see it coming ?
one needs to be stupid to think this is supply and demande, they don't need to open new fabs to increase production, no fab runs at 100% capacity, beside they don't just produce Dram, they produce other stuff, they can just increase production by using what's free, or diverting from another product, because come on, over 2 years of supply and demand ? seriously ?
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As they say, you can always start your own fab.
 
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risc said:
As they say, you can always start your own fab.
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I will with black jack and hookers. In fact, forget the fab. BTW, AMD FX owners can get away with cheap DDR3 memory cause right now DDR3 memory is cheap, specifically ECC DDR3. A lot of servers are being replaced with CPU's that use DDR4, and Intel chips mostly can't use ECC. I got 16GB of DDR3 ECC memory for $23 on Ebay.
 
Unter Dog said:
I've designed external ram into many of my products. It is ugly for most medium to small manufacturers of electronics right now. I just got done for the day at 11:30 pm working on redesigning an assembly due to supply constraints. Working all weekend....first world problems. I still want to say F the memory makers F the rest of the supply base I'm sick of this shit.
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We also just got through redesigning a new product to reduce the amount of external DRAM needed. Found a new CPU, which has four times the amount of onchip RAM as the previous unit, allowing us to reduce the external RAM requirements by 75%.

On another product we switched from DRAM to MRAM as the costs are coming close to the same. Allowed us to remove the external battery support, which oended up reducing the cost of the product.

The only upside we are seeing is keeping the engineers and logistics folks busier than they are used to being.
 
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Killerxp100 said:
Just waiting for the next dram class action lawsuit.
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Why wait? Get it going since you’re so sure of the illegal activity. You have proof, right? Surely you wouldn’t slander companies without basis!
 
Tyns said:
Why wait? Get it going since you’re so sure of the illegal activity. You have proof, right? Surely you wouldn’t slander companies without basis!
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I dont have to start anything. There is a history of price fixing and if its happening again you can be sure a sure a similar lawsuit will be filed.
 
Tyns said:
Why wait? Get it going since you’re so sure of the illegal activity. You have proof, right? Surely you wouldn’t slander companies without basis!
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There's already an investigation going on.
https://www.gamersnexus.net/industr...t-investigating-dram-price-fixing-allegations

An official from the regulatory body, Xu Xinyu of NDRC, stated the following: “We have noticed the price surge and will pay more attention to future problems that may be caused by ‘price fixing’ in the sector.”
 
Killerxp100 said:
Just waiting for the next dram class action lawsuit.
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The sad thing is, this will just keep repeating itself, because it's obviously cheaper to price fix and get sued, rather than slightly overproduce and have cheapish ram prices.
 
rgMekanic said:
56% jump in profit with a 19% jump in sales.. sounds like we're getting around 37% screwed.
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While I certainly don't think this is funny, I couldn't help but laugh at this comment you used to summarize the situation.
Very well put! :D
 
MrDeaf said:
The sad thing is, this will just keep repeating itself, because it's obviously cheaper to price fix and get sued, rather than slightly overproduce and have cheapish ram prices.
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Capitalism doesn't work when everyone is working with each other to fix the prices. This is becoming frequent in the industry, to the point that governments need to fine those caught doing it so much that it could bankrupt them. The memory industry needs a good slap in the head.
 
DukenukemX said:
Capitalism doesn't work when everyone is working with each other to fix the prices. This is becoming frequent in the industry, to the point that governments need to fine those caught doing it so much that it could bankrupt them. The memory industry needs a good slap in the head.
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Yes because bankrupting the producers of ram will surely lower prices?
 
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Grimlaking said:
Yes because bankrupting the producers of ram will surely lower prices?
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Exactly, because either they have to produce so many memory chips at lower cost to recoup their losses, or they sell their factories to someone who isn't going to price fix. Fining them anything less than their profits won't teach them a lesson, and the memory industry has price fixed countless times. Gotta hurt their bottom line.
 
Killerxp100 said:
I dont have to start anything. There is a history of price fixing and if its happening again you can be sure a sure a similar lawsuit will be filed.
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Right, and no lawsuit has been filed. What does that tell you?

DukenukemX said:
There's already an investigation going on.
https://www.gamersnexus.net/industr...t-investigating-dram-price-fixing-allegations

An official from the regulatory body, Xu Xinyu of NDRC, stated the following: “We have noticed the price surge and will pay more attention to future problems that may be caused by ‘price fixing’ in the sector.”
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Lol China. That’s rich, that’s already over, btw; Samsung released a memorandum of understanding (I.e. not binding) that they will slow the rate of pricing increases. Samsung also agreed to build more capacity in China in the future. SKH and Micron were not party to any talks and have made no concessions.

MrDeaf said:
The sad thing is, this will just keep repeating itself, because it's obviously cheaper to price fix and get sued, rather than slightly overproduce and have cheapish ram prices.
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Or there’s literally no case.

DukenukemX said:
Capitalism doesn't work when everyone is working with each other to fix the prices. This is becoming frequent in the industry, to the point that governments need to fine those caught doing it so much that it could bankrupt them. The memory industry needs a good slap in the head.
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Evidence of this collusion? That it happened in the past doesn’t mean it’s happening now and is not admissible in court.

DukenukemX said:
Exactly, because either they have to produce so many memory chips at lower cost to recoup their losses, or they sell their factories to someone who isn't going to price fix. Fining them anything less than their profits won't teach them a lesson, and the memory industry has price fixed countless times. Gotta hurt their bottom line.
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You just demonstrated you don’t know a damn thing about the memory business. Get a clue before you post on this topic again.
 
Governments are slow to act. They need to dot the I's cross the T's.

Repeat offenders for other crimes get longer and longer sentences. At such time a court finds criminal price fixing I agree the fine needs to ramp up.

Part of the problem being the product is like heroine to the modern world. Just can't do without it. Add the insane buy in costs and no one can easily replace the memory makers or unseat them.

I am suprized how personal some people are taking this. Either in terms of being bent over, and not in a good way, by Samsung and others, though with current prices I really get it.

It also really, really, suprizes me how defencive some persons are at the idea others would belive recidivism is occurring. As if we need permission to think that and are stupid for doing so.

I just paid $400+ for the exact same model, brand, everything, pair of ddr4 dimms I paid $200 for just about a year ago.

That is an awful lot of 'smart' business practice.

Given the rate of repeat offenders for other crimes sure looks like the same 'ol thing to me.
 
Tyns said:
Lol China. That’s rich, that’s already over, btw; Samsung released a memorandum of understanding (I.e. not binding) that they will slow the rate of pricing increases. Samsung also agreed to build more capacity in China in the future. SKH and Micron were not party to any talks and have made no concessions.
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They said that but nothing came from that. The shit hits the fan when Europe gets involved.


Evidence of this collusion? That it happened in the past doesn’t mean it’s happening now and is not admissible in court.
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Its happened multiple times in the past. As in the memory industry is repeat offenders of price fixing. I would understand if this only happened once, but it isn't.

You just demonstrated you don’t know a damn thing about the memory business. Get a clue before you post on this topic again.
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Look Tyns, if you want to dispute what I said than add substance to what you're saying. Don't act like a 15 year old and post nonsense. What does anyone do when someone is a repeat offender? They punish them with more fines. If the memory industry is yet caught again doing this then they need to be fined to near bankruptcy. Money is their bottom line and they won't stop so long as they profit in the end.

Susquehannock said:
YGPM. Cannot seem to find any near that price.
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Yea about that. Turns out the seller removed himself from Ebay. So the memory I ordered is stuck in limbo. I called Ebay and they refunded my money. So yea, memoryless once again.
 
m_isom said:
Supply and demand is a joke. Larger groups have been buying up smaller makers for years, then manipulating the supply chain to keep demand inflated. Since there are 3 or so big players they can agree to keep prices high. Think they had done this before with 6 groups last time they were investigated and fined. If you search the news archives here you should be able to see it.
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This is true. I'm a staunch capitalist, but capitalism only works if you don't have a monopoly. A trust is a de facto monopoly and the memory market has been manipulated for years.
 
sleepeeg3 said:
This is true. I'm a staunch capitalist, but capitalism only works if you don't have a monopoly. A trust is a de facto monopoly and the memory market has been manipulated for years.
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I'm not a capitalist. I think capitalism is going to the death of us all, but I also know that capitalism works so long as everyone is fighting for your money. That means better and cheaper products. Like Intel making better CPU's, cause AMD is also making better CPUs and with better prices too. Which Intel is a frequent offender when it comes to exploiting capitalism.

But memory is a commodity and as such it can be exploited with price fixing. Cause when people buy memory, they generally don't give a shit who makes it. You buy it, then it works. You can't make better memory beyond clock speed, but generally if a consumer wants DDR4 2400 memory, they'll buy whoever makes the cheapest. Companies don't like racing to the bottom, so price fixing makes sense. My hope is that AMD, Intel, and Nvidia are going to look into this cause those memory prices are going to effect them as well. They have more vested interest than the government does.
 
DukenukemX said:
Its happened multiple times in the past. As in the memory industry is repeat offenders of price fixing. I would understand if this only happened once, but it isn't.
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Not indicative that it's happening now, and it's not for numerous reasons I've mentioned elsewhere (massive increase in cost per bit capacity growth, length of time to bring new capacity only, smaller and smaller ROI for new technology migrations/nodes, etc). Look up Samsung, SK Hynix, and Micron capital expenditure for this year.

DukenukemX said:
Look Tyns, if you want to dispute what I said than add substance to what you're saying. Don't act like a 15 year old and post nonsense. What does anyone do when someone is a repeat offender? They punish them with more fines. If the memory industry is yet caught again doing this then they need to be fined to near bankruptcy. Money is their bottom line and they won't stop so long as they profit in the end.
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I'm not going to explain how the memory industry works here, learn it on your own if you want to comment intelligently. Almost all costs associated with producing memory is front loaded in R&D, building clean room space, buying manufacturing equipment and installing the equipment and getting it up and running in a fab. Once in place, they don't slow production, period.

Tim Arcuri, now with UBS, just released a report in which he makes some bad conclusions, one of which is that there will be a 5% oversupply of DRAM bits in 2019. What you should note from that report, though, is his estimated effect that 5% oversupply will have - over a 50% decrease in ASP's (Micron would be borderline profitable at those prices). Now if you want to keep shouting from the mountaintops "collusion! price fixing! Force the memory mfgs to make more memory!" and look like a butthurt idiot, be my guest. Samsung makes the majority of its profits from memory. SK Hynix and Micron make all of their profits from memory. These three companies have no interest in overproducing as it would cripple them and they're already spending a combined $40+ billion dollars on capex. This doesn't include Toshiba, Intel or Western Digital's capex in NAND.

The world and its technology have changed in the last few years - everything needs gobs of memory now. Blame AI, cloud infrastructure, AV, IoT, higher resolution video, etc. There's too much data. New memory tech is your only hope for significantly cheaper memory. 3DXP will actually be (well, should be if there's no unannounced problems) viable for most users as system RAM and will considerably drop per-bit cost and power consumption, and here's the next gen memory spec: https://genzconsortium.org/
 
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