Samsung, SK Hynix Extend DDR4 Production Amid Price Inversion

Two major memory giants, Samsung and SK Hynix, have recently altered their production plans for DDR4 memory, extending their manufacturing timeline beyond the previously announced shutdown date. Initially, both companies had planned to cease DDR4 production by the end of 2025 or early 2026. However, industry insiders have revealed that Samsung has pushed back its DDR4 production schedule to 2026. SK Hynix has followed suit, also extending its production timeline for DDR4 memory.

The decision to prolong DDR4 production comes amidst an unusual price phenomenon in the memory market. DDR4 prices have experienced a rare "inverted" trend, where older technology prices are higher than those of newer technology. This price inversion has created a unique market dynamic, prompting the two giants to reassess their production strategies. The extended production timeline indicates a continued demand for DDR4 memory, despite the industry's shift towards DDR5 technology.

This shift in production plans is driven by the current supply and demand dynamics. The supply of DDR4 has been tight, leading to a rapid depletion of inventory and a subsequent surge in prices. This scarcity has been exacerbated by the increased demand for HBM (High Bandwidth Memory), which consumes significantly more wafer resources than standard DRAM. As a result, the resources allocated to DDR4 production have become more constrained, further tightening the supply.

Additionally, other DRAM manufacturers, such as those in China, have announced plans to stop DDR4 production and accelerate the transition to DDR5. This has further exacerbated the supply shortage, leading to panic buying among some consumers. The combination of these factors has driven DDR4 prices to exceed those of DDR5, despite DDR5 offering superior performance and efficiency.

The price inversion has led to a situation where maintaining older production lines for DDR4 becomes more profitable. This has prompted Samsung and SK Hynix to keep their DDR4 production lines running to capitalize on the higher prices and meet the ongoing demand. The extended production timeline provides a buffer period for the transition to DDR5, ensuring a smoother shift without disrupting the supply chain.

However, not all memory giants are following this trend. Micron Technology, another major player in the memory market, appears to be sticking to its original plan to phase out DDR4 production. The company had previously announced the end-of-life (EOL) for DDR4 and LPDDR4, with an expected cessation of DDR4 shipments within 2-3 months. This divergence in strategies highlights the varying approaches different companies are taking in response to the current market conditions.

Analysts suggest that the current price inversion is likely a short-term phenomenon. Historical data shows that similar price inversions, such as when DDR2 prices exceeded DDR3 prices, lasted for about four months. This indicates that the current situation may stabilize as supply and demand dynamics adjust. SK Hynix's management has also acknowledged that the recent price surge is driven by short-term supply concerns and increased demand.

Overall, the decision by Samsung and SK Hynix to extend DDR4 production reflects the current market realities and the continued demand for this technology. While the industry is transitioning to DDR5, DDR4 remains a critical component in many systems. The extended production timeline allows these companies to optimize their production capacities, manage inventory more effectively, and ensure a smoother transition to the next generation of memory technology.