For Memory-Chip Makers, the Worst Appears to Be Over

January 9, 2020

SEOUL -- After an excruciating year, makers of memory chips have a reason to breathe a sigh of relief: The industry's slide has ended. The latest sign of a rebound was Samsung Electronics Co., the world's largest memory-chip maker, issuing guidance that topped analysts' estimates. That follows comments from rival producer Micron Technology Co. in December that the industry has finally confronted its worst days.

A big accelerant is the global rollout of the next-generation 5G mobile networks, which should energize previously falling smartphone sales and juice company investments into artificial intelligence, computing and data storage -- areas that all require heavy memory demands. Prices for memory chips had nosedived for much of the past 15 months. Following a historic run of profits, the industry overproduced as the global economy hit a skid and left a glut of unsold inventory.

The final three months of 2019, however, showed a return to better days. Contract prices for NAND, a major type of memory chip, rose for the first time in more than a year and half, according to TrendForce, a market-research firm. The other major memory chip, DRAM, is forecast to show contract-price increases for the first time in over a year during the first three months of 2020, TrendForce

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