Memory spot prices surged 24% and contract prices fell another 10.5%

Samsung released its financial report two days ago, and its Q2 profit plummeted by 53%, mainly due to the decline in memory prices. Samsung said that as customers in the data center market adjusted their inventory, weak demand for memory chips and falling prices still existed, and it expected that there would be uncertainty in its business for the rest of the year. Despite the uncertainty in memory prices and the Japanese government's control over important semiconductor materials, Samsung did not easily limit production and said it would not reduce production due to human factors.

Over this period of time, the price changes of memory have also been worrying. As we have said before, there are both calls for price increases and calls for price decreases. It depends on their specific position. Currently, those who are calling for price increases are mainly some memory manufacturers and merchants, who use the Japan-South Korea dispute and other issues to hype up spot prices. However, contract memory accounts for 90% of the market share, and the price of this part has not increased.

According to the latest report released by DRAMeXchange, a semiconductor research center under TrendForce, the spot price of memory increased by 24% in July, marking the first rebound in memory prices in 10 months.

However, spot memory accounts for a very small proportion and is not the mainstream of the market. In July, the memory contract price not only did not increase, but fell by 10.5%. The average transaction price of DDR4 8GB dropped from US$28.5 in June to US$25.5.

The reason why memory contract prices did not rise but continued to fall is still related to market demand. DRAMeXchange pointed out that the global smartphone market will decline by 5% this year, and the PC market will also decline by 4.8%. The data center market was previously expected to grow by 3.9%, but now it has been adjusted to zero growth. Terminal demand is not hot enough, and there is no room for contract prices to rise.

As for some memory manufacturers taking production cuts in order to prevent memory prices from falling, in reality, it is just a lot of noise but little action. The production cuts are mainly due to the previous generation of processes or the process conversion itself. The current memory production capacity has not been significantly reduced.

In other words, although some manufacturers have announced that they will reduce production with the intention of creating a possibility of insufficient supply of memory, they have not actually reduced production. After all, in a declining market, whoever dares to actually reduce production will be immediately attacked by other manufacturers who will grab the market, and in the end they will be the ones who suffer the loss.

An important factor affecting the recent surge in memory spot prices is that Japan's control of materials such as photoresist and hydrogen fluoride may cause production damage to companies such as Samsung and SK Hynix, but this has not actually happened. Judging from the fact that Korean companies have agreed to reduce the memory contract price, the impact of this incident is not as great as advertised. After all, Japan's policy still has a 90-day buffer. Leaving this time also leaves the Korean government and companies with the possibility of negotiation. Restricting the export of Japanese materials also has a significant impact on Japanese companies.