Retailers use Japan-Korea trade war as excuse to drive up DRAM prices

Some online retailers are trying to take advantage of Japan's export restrictions on South Korea's semiconductor industry by suddenly raising prices for DRAM chips used in personal computers, The Korea Times reported.

This is undoubtedly bad news for consumers, and retailers said that insufficient supply of the product was one reason for the price increase, and said that the supply problem was the result of Japan's export controls. But semiconductor manufacturers said that the retailers' claims were completely untrue.

"There is no shortage of DRAM chips even after Japan tightened export regulations," said an executive at a semiconductor company who asked not to be named. "It seems that retailers are taking advantage of the situation to raise chip prices."

Since Japan began to restrict the export of semiconductors and panel materials to South Korea, some online retailers have raised the prices of DRAM chips produced by Samsung Electronics and SK hynix. For example, the price of Samsung Electronics' 16GB DDR4 PC4-19200 DRAM was about 65,000 won (55 U.S. dollars) earlier last week, but now it is 100,000 won.

Semiconductor industry officials said semiconductor companies have inventory, so Japan's export controls will not immediately lead to a reduction in supply. Another official pointed out that international prices for DRAM have been falling due to falling demand. "There is no need for us to reduce supply because we need to sell DRAM as soon as possible," he said.

According to chip price tracker DRAMeXchange, DRAM prices will drop by 10% - 15% in the third quarter of this year. Nanya Technology General Manager Li Fuying said that although sales and demand in the third quarter have rebounded from the second quarter, the key issue at present is that the inventory of original suppliers is still high. The DRAM price decline in the third quarter is difficult to stop, and the ASP will still be lower than the second quarter, but the decline may be smaller than the 15% in the second quarter.

IC Insights pointed out that too much capital expenditure usually leads to overcapacity and later price weakness, and these problems will be amplified by economic weakness and weak end-user demand. With Samsung, SK Hynix and Micron actively investing in DRAM expansion last year, coupled with economic and trade uncertainties that continue to affect the global market this year, IC Insights believes that the risk of DRAM overcapacity and subsequent price weakness will continue for the rest of the second half of this year.