Samsung plans to vastly increase its general purpose DRAM production, which is expected to lower the price in the market. It’s highly likely to have negative impact on the future revenue of SK Hynix and Micron.

Samsung is in high gear to transform 36 and 32 nanometer process at its Line 15 in Hwasung, Korea to 20 nanometer process. The chip giant’s plan is to dedicate its current 25nm process to mobile DRAM, while the new 20nm process Fab produces only general purpose DRAM. It actually has started manufacturing 20nm 4Gb DDR3 DRAMs from last month.

If 36 and 32nm process line is converted to 20nm, physical die yield from each wafer doubles thanks to the reduced size, which has the same effect as building an additional line. Samsung’s Line 15 can produce 144,000 of 300mm wafers a month. “The transformation to 20nm is ramping very fast. It’s known that the general purpose DRAM ramping will be elastically adjusted to market price,” said an industry insider.

According to a research by DRAM Exchange, the price of most popular DDR3 2Gb 1,333MHz DRAM continuously rose after reaching the bottom at 0.80 dollar in Nov. 2013 to hit a new high of 1.97 dollar in last December. Industry experts see it as the reason for SK Hynix and Micron’s relatively higher profit margin than Samsung, in whose businesses the universal DRAM has bigger weight. The general purpose DRAM price has been declining from early this year as SK Hynix’ Wuxi fab started re-operating. Samsung’s DRAM ramping will fuel the price fall.

Samsung is expected to take ‘Golden Price’ tactic by continuing production ramping until the price reaches the point that only Samsung can record profit. Samsung has been mass producing 20nm DRAM from March, while competitors can start production in 6 to 12 months. Even though the production cost of each manufacturer is highly confidential, the industry sees that Samsung, with its 20nm process, will be able to maintain profitability even when its main product price falls to 0.7-0.8 dollar.

One industry expert said, “The general purpose DRAM supply shortage was caused because Samsung’s migration from 36nm to 25nm was late and its 25nm line was mostly allocated to mobile DRAM. Samsung’s return to Golden Price strategy aims at recovering price control.”