Suspicious Old Sod

It’s been lovely reading the coverage about the electricity cuts at the Samsung memory plant at Kiheung because every single report has been sympathetic to Samsung and thoroughly concerned about the effect on its business. It was not always like this.

In times past, a memory chip plant ‘disaster’ was immediately suspected to be a wheeze to jack up chip prices. Chip buyers at end-product companies have only to spot a hint of trouble in getting supplies, with the consequent spectre of halted production lines, for them to get twitchy and put in orders to cover themselves. One remembers a resin plant burning down in Japan. It turned out to supply something like 90 per cent of all the resin used to encapsulate chips. Chip prices rose, and many called ‘fix’, but nothing was ever proved. Price rises have happened this time. After six months of memory price wars during which, at one time, Samsung refused to supply tier one customers because prices were too low, DRAM and NAND prices have hardened. And, as an extra bonus, since the electricity failure, the shares of memory makers have gone up. Jolly good show all round. The media reports have accepted it as an unfortunate disaster. Either we live in more credulous times, or we’re all just nicer than we used to be but, as a suspicious old sod, I’m surprised by the unquestioning acceptance of this story. And the thought remains, that Samsung, with 27 per cent worldwide DRAM market share, and 44 per cent worldwide NAND flash market share, has an awful lot of power over chip prices. Even a rumour of a supply problem would harden them up.

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