Samsung Q4 and FY 2021 Results

October 28, 2021

Samsung is the market leader in both DRAM and NAND and their memory divisions are just part of a massive conglomerate. I look through their earnings presentation and conference call transcripts for insight into the state of the memory market. This is not an analysis of their earnings, prospects, etc.

Earnings Presentation

• Demand remained solid in the fourth quarter for memory, led by the server segment. Financial results in memory declined sequentially because of global supply chain issues and a slight drop in ASPs. They “refrained from excessive bit shipment considering our inventory level and the market outlook.” I read this to mean they have low inventory of finished memory products and decided not to sell into this period of lower prices when they believed the memory market would strengthen soon.
• Outlook for the first quarter of 2022 is for uncertainty to continue from supply chain constraints, with potential improvements in demand for servers and PCs. New mobile products may offset seasonal weakness.
• Samsung referenced multiple times they would increase portion of memory manufacturing on advanced nodes. This indicates extra focus on cost reduction.
• For the full year 2022, the company’s outlook seems cautiously positive. They said server demand will grow with increased IT investment and new CPUs. Proliferation of 5G devices will support mobile demand.

Analyst Call

These are the highlight quotes regarding DRAM and NAND:

In DRAM, impacts on set from global supply chain issues differed by degree that were felt throughout all applications. In server, however, demand remained strong, thanks to an increase in DRAM content per box with increased adoption of high core CPUs amid a continuation of solid end demand.
• Next, I’ll talk about the NAND market. For server SSD, fundamental demand from major data center customers was robust, but there were some market effects related to disruptions in the IC component supply chain. Demand for client SSD was somewhat stagnant because of inventory adjustment by some customers and set build disruptions caused by component supply issues.
• To answer your first question about the memory CapEx. Yes, as we mentioned, the overall memory CapEx in 2021 did increase year-over-year. It’s difficult to give you the breakdown between DRAM and NAND. But overall, there was an increase in the facility equipment-related CapEx spending … And so we believe that the supply bit growth that we are achieving is in line with the market demand levels because we execute flexibly our equipment-related investments
• Regarding [DRAM] price, of course, it’s difficult for us to also predict price at this point. But we also noticed, as you mentioned, a clear tendency of the memory market cycle height and also the length getting shorter than before. Also considering that our inventory remains to be at fair levels, these are all signs that indicate a possible stabilizing of the market. Also recently, a third-party agency did announce its view that the market may actually change direction during the first half. And so we are adding this as one of the possible scenarios.

Memory pricing and bit growth commentary:

• In the fourth quarter for DRAM, our bit growth decreased by a percentage in the mid-single digits (was low-single-digits % in Q3), and ASP declined by a similar magnitude (was high-single-digit % increase in Q3).
[For DRAM] in the first quarter of 2022, we expect market bit growth to fall by low single-digit %, and we should be similar to the market.
• For NAND, in the fourth quarter, both our bit growth and ASP declined in the low single-digit % range (in the third quarter, bit growth was mid-single-digit and ASP increased around 10%).
• For the first quarter of 2022, we expect market bit growth to decrease by a low single digit, and our bit growth should slightly outperform the market.


Even for Samsung, the substance in their commentary this quarter was light. They made a lot of general statements about demand by segment but didn’t say anything predictive. Management repeated the refrain heard by all other semiconductor companies – that supply chain shortages are dampening demand for memory. The company did say their inventory levels for memory are low and they held off some sales to replenish rather than sell during a period of weak pricing. Samsung appears to have lost some DRAM market share in the third and fourth quarters of the year. They are forecasting overall DRAM bit supply to decline low single-digit % with Samsung similar. Samsung’s DRAM ASPs declined mid-single-digit % in the fourth quarter, following a high-single-digit % increase in the third quarter. Thus, for the second half of calendar 2021, Samsung’s DRAM ASPs increased a couple percent. NAND bit growth and pricing declined a small amount in the fourth quarter. Like DRAM, NAND bit growth is expected to be negative low-single-digit percent in the first quarter of 2022, with Samsung outgrowing the market “slightly.” Not much new here, with Samsung forecasting strong DRAM demand in 2022, led by servers, but not going so far as to predict strong pricing increases. As a Micron investor, the most important takeaways from here are the small decline in DRAM ASPs Samsung saw in Q4 of 2021 and their view that overall DRAM bit supply will shrink in the first quarter of 2022. This is the seasonally softest time of the year for DRAM demand so good for it to line up with a lull in supply. It feels to me that DRAM supply growth is still muted, so if the relieving of supply chain constraints brings out pent-up demand for memory, pricing could gain momentum upward as 2022 progress.

-Smooth Hughes (long MU)

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