Analysts see no respite from higher costs until end of 2018

The price of memory chips, key components in mobile phones and computers, is likely to continue rising until the end of 2018, when the technology matures to enable greater production capacity, analysts said on Tuesday.

The comments came after memory chips experienced a price surge in the past six quarters, putting heavy pressure on mobile phone makers and triggering concerns about illegal pricing behavior.

Hattie He, an analyst at market research company Canalys, said it will take about another year for chip makers to upgrade their manufacturing technology, so as to enlarge the production capacity of 3D NAND memory chips, a type of high-end non-volatile memory chip that can store data without using power.

"Generally, market demand for memory chips grows rap-idly every year, and companies can often move quickly to improve their technologies. But this time, it is taking longer for them to keep up the pace, because the technology is more complex and it takes time to mature," He said.

Memory chips are widely used in high-end data storage products on electronic devices such as smartphones, personal computers and data servers. Samsung Electronics Co, the South Korean tech heavyweight, accounts for about 35.4 percent of the global NAND flash memory chips.

China, though one of the world's largest manufacturing powerhouses for electronic devices, relies mostly on foreign companies to get high-end processors.

According to the General Administration of Customs, China imported chips worth $227 billion in 2016, nearly double the $116.5 billion it spent on crude oil imports.

In January, Tsinghua Unigroup Ltd, China's top State-owned chip manufacturer, revealed plans to build a $30 billion memory chip factory in Nanjing, but it will be several years before the plant becomes operational.

Xiang Ligang, CEO of telecoms industry website Cctime, said the global memory chip market is still dominated by foreign companies, and it is of high importance to cultivate domestic players.

"As more Chinese companies enter the sector, the gap between demand and supply is likely to narrow. But more efforts are needed to ensure that we are capable of producing premium processors," Xiang said.