Chip price war unlikely

Normans_BayeuxSamsung does not expect a price war to break out in the semiconductor industry next year even though it is ramping up capacity.

CEO Kwon Oh-hyun said that he will have to “wait and see how things will go next year, but there definitely will not be any game of chicken”,

Memory chip makers have reported strong profits this year thanks to better-than-expected demand for PCs and servers.  Most analysts believe industry conditions will remain favourable in 2015.

But Samsung’s plan to invest $14.67 billion in a new South Korea chip plant stoked concerns about the industry’s profit outlook. Some investors worry that the firm could ramp up supply and undercut prices to squeeze Hynix and Micron’s bottom line.

Cooler heads have pointed out that Samsung’s plant will not begin production  until 2017. They say margins in the memory business are important to Samsung, given the mobile division’s falling smartphone profits.