Samsung Electronics Co Ltd to expand memory chip production line in Xi’an, China

The developments puts to rest concerns of waning demand for memory chips which are once again on the rise on the back of strong demand from the smartphone and server market.

A spokesman for Samsung Electronics Co Ltd stated it plans on building a new memory chip production line in late March in China.

The move is aimed at boosting production levels of it NAND flash memory chips to meet future demands. The rapid growth of data centers have spurred the need for more memory capacity and as per TrendForce, a research provider, this demand is expected to underpin revenue growth and margins for Samsung’s NAND flash memory business in 2018.

In August 2017, Samsung Electronics had stated it expects to sink in $7 billion in the next three years to expand its NAND memory chip production line in Xi’an, a city in northwestern China.

Incidentally, in the fourth quarter of 2017, Samsung’s revenues from its NAND flash memory unit rose by 9.8% to $6.17 billion, said Trendforce. Demand from the server market and from smartphones have lifted average prices as well as shipments.

The firm’s shares have already risen by around 13% from early March due to improved outlook for the memory chip market, said analysts. This puts to rest concerns that the recent boom in memory chip demand may end.

“Memory chips are solid. For DRAM chips, server demand is very strong,” said Kwon Sung-ryul, an analyst at DB Investment & Securities. “NAND flash chip shipments and price movements are moving within expectations, but there’s a chance that supply will become tighter again in the second half of 2018 due to rising demand.”

Analysts say, this expansion will affect memory chip supply only after 2019.

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