Share prices for companies from Samsung to SK Hynix are dropping alongside a rapid decrease in memory pricing, which fell by almost 5-percent in Q4. Perhaps worse still, analysts previously though the memory chip market would continue to be a windfall for companies for at least another year, but are now predicting that growth rate in the industry could fall to 30 percent less than half from the prior fiscal year. Among those drops mentioned above, Samsung's shares fell by 7.5 percent last week, following what some are calling a disappointing profit estimate for the quarter. SK Hynix faired somewhat better but also saw a drop of 6.2 percent in its share prices. The steep drop is obviously not good for any company whose primary source of income is in the chips industry. Fortunately, there are not expected to be any major crashes in the market, primarily because the smartphone industry generates such high demand for memory chips. Better still, analysts reportedly expect things to maintain stability across the market for at least the next full fiscal year.
That's because while growth is a key metric for discussing the success of an industry, there has been relatively explosive market-wide growth period for more than a year now – beginning near the middle of 2016. In fact, it grew to be a $122 billion industry over 2017, with a growth rate of almost 70 percent for past year. That kind of growth is exceptional and also much stronger than is normal. Since the vast majority of that growth can be linked in with massive new growth in the use of smartphones, tied directly to expansion into new regions from manufacturers and strong governments backing of network growth to support that, returning to 30 percent is effectively a return to what would normally be viewed as strong growth.
Meanwhile, it isn't necessarily true that every portion of the market will feel the crunch, either. Demand will likely continue to grow for both NAND flash memory and DRAM. Due to increases in demand over the past year, supply for NAND is up and pricing should remain relatively low. Meanwhile, increasing demand for higher capacities in both – primarily for use in high-end smartphones and related technologies – should result in a similar effort from components manufacturers, with prices starting high for high-end device components and then falling as production peaks. All of that should help keep things relatively stable, even though the companies involved won't likely see another jump in profits this year.