It’s earnings call season, and we have heard of a slowing DRAM market and NAND flash price declines from Micron, SK hynix, Intel, and now Samsung. DRAM prices have stopped increasing, and that can be viewed as a precursor to a price decline.
Samsung’s 31 October, 2018 3Q18 earnings call vindicated Objective Analysis‘ forecast for a 2H18 downturn in memories that will take the rest of the semiconductor market with it.
Those familiar with our forecast know that for a few years we have been predicting a downturn in the second half of this year as NAND flash prices fall, followed by a DRAM price collapse. After the DRAM collapse the rest of the semiconductor market will undergo a downturn.
We’ve been calling for this downturn for some time. Dan Hutcheson at VLSI Research has been videotaping our forecast every December for the past 10 years and posting these videos on the VLSI WeSRCH website. You can look at the video recorded in December 2015 (as well as our 2016-18 forecasts) to see an early rendition of our outlook for the current downturn. Those who don’t have the time to watch the entire 23-minute video and want to get immediately to the 2018 prediction can zoom ahead to 19:00. Although the 2018 downturn was first captured on video here, this forecast is one we have been projecting for even longer.
Our forecast methodology is based upon a highly-predictable semiconductor cycle. The prices of commodity memory chips (DRAM and NAND flash) follow very consistent patterns during shortages and oversupplies, similar to this post’s graphic. These shortages and oversupplies are driven by relatively steady demand growth and swings in capital spending. Careful analysis of capital spending and consideration of other important factors allow a forecaster to predict the market’s swings consistently and accurately, yet this approach is rarely used in semiconductor forecasting.
Objective Analysis has the most consistently-accurate forecast methodology in the industry, and we’re proud of that fact. Our forecast accuracy is even the focus of a full page on the Objective Analysis website. Our clients know well in advance when market cycles are likely to occur, and they can plan for these events to their advantage. Please contact us if you would like to benefit from a clear vision of what the future has to offer.