After Micron announced its huge losses, WDC, another US storage company, also announced its first-quarter results. The performance showed a loss of US$570 million. The onslaught made them unbearable.
WDC Western Digital is the world's largest hard disk manufacturer. It also produces SSD solid-state hard disks and mechanical hard disks. It shipped 12.6 million hard disks in the quarter, and its shipments fell by 35.7% year-on-year. The price of mechanical hard drives continues to fall, but the price of mechanical hard drives is rising.
WDC Western Digital has basically monopolized the solid-state hard disk business. Relying on its monopoly advantage, its solid-state hard disk average price has increased by US$8 year-on-year. In this quarter, the revenue of mechanical hard disks reached US$1.496 billion, but the gross profit can reach 24%. The price of the solid-state hard disk fell and the solid-state hard disk revenue was 1.307 billion US dollars, and the gross profit was -5%, which shows that the loss came from the solid-state hard disk business.
The price of solid-state drives has continued to fall, and the price of NAND flash has been cut in half since the middle of last year, which has driven the price of solid-state drives to fall. The continuous decline in the price of NAND flash has caused Micron, the world's third largest memory chip company, to suffer a loss of US$2.3 billion in the first quarter of this year. Micron's revenue in this quarter was only US$4 billion, which shows that Micron's losses are serious.
WDC Western Digital does not produce NAND flash. It produces solid-state drives by purchasing NAND flash particles from Samsung, SK Hynix, and Micron. It may be that it has avoided greater losses in the solid-state drive business by greatly reducing the output of solid-state drives. The use of mechanical hard drives has reduced the overall business loss.
The price of global memory chips continues to fall, mainly due to the surplus of the global chip industry. There have been signs of surplus in the global chip industry since the first half of last year, and the global memory chip industry has also begun to experience surplus in the second half of last year. This has given the memory chip industry brought a huge impact.
Another reason is the rise of China's memory chips. The second phase of the two major memory chip companies in China started mass production last year and is expected to be put into mass production this year. The mass production of the second phase will double their production capacity and help They aggressively seize the domestic market, and the way they aggressively seize the domestic market is to cut prices. The prices of solid-state drives and DRAM memory are much lower than those overseas.
South Korea is the world's largest producer of memory chips. Samsung and SK Hynix are the world's top two memory chip companies. Relying on their scale advantages, their losses are smaller than Micron's. Cut production to reduce losses. Samsung used to like to expand counter-cyclically. However, in the first quarter of this year, due to the surge in memory chip inventory, the value of inventory chips has reached as high as 340 billion yuan. Samsung, which could not bear it, also announced production cuts.
Faced with the price offensive of Chinese memory chips, Samsung once chose to follow up and lowered the price of 2TB SSDs even lower than Chinese brands. However, recent news indicates that Samsung plans to stop further price cuts; The price will be lowered again. After all, it has suffered serious losses. Now the US storage company WDC is also losing money, which shows that US chips are no longer able to resist the price offensive of Chinese chips.
U.S. chips have been the global leader in chips for many years. Back then, they used their monopoly advantage to earn huge profits. Now they are suffering from losses under China’s breakthrough memory chip offensive. It shows that once Chinese chips break through, they will bring huge pressure to them. Then they fell into a huge loss, and the competitiveness of Chinese chips made them afraid.