TrendForce: Production Capacity Limited, Server DRAM Prices May Increase by More Than 40% This Year

On February 25, a survey by TrendForce's semiconductor research department pointed out that since the third quarter of 2020, the proportion of DRAM production capacity for servers has dropped to 30%. In addition to balancing the supply and demand imbalance of product lines, this proportion reduction is also to adjust the average retail price (ASP) of DRAM in each product line.

TrendForce pointed out that the demand momentum for consumer terminal products did not slow down in the first quarter of this year, so the original equipment manufacturers still continued their production capacity planning last year. However, the second quarter is traditionally the peak season for server unit shipments, and the demand for server DRAM is expected to gradually strengthen in the second quarter, which will make the original equipment manufacturers more active in quoting server DRAM. It is estimated that the contract price in the second quarter will be increased from the original 8~13% to 10~15%, and it is not ruled out that some transactions will increase by 20%.

From the supply side, DRAM manufacturers are relatively conservative in their factory expansion plans this year, and generally have no new production capacity plans. In addition, due to the oligopolistic structure of the DRAM market, manufacturers have prioritized profitability in capacity planning.

TrendForce Consulting said that looking back at 2020, driven by the demand for online office and education, original equipment manufacturers have readjusted their production capacity allocation, and in the third quarter, they adjusted their production capacity to prioritize meeting the strong demand for smartphones and laptops, while converging the proportion of DRAM used in servers.

Overall, TrendForce believes that the average contract price in the first quarter of this year will increase by about 8% compared to the fourth quarter of 2020, and expects an average monthly increase of 3-4% in the first quarter. It does not rule out the possibility that monthly prices will still increase slightly within the framework of quarterly bargaining in the future.

Looking ahead, TrendForce predicts that the demand for server DRAM will continue to be strong until the third quarter, especially as the shift in corporate work paradigms and geopolitical uncertainties will continue to drive server shipments. Therefore, it is expected that the cumulative increase in server DRAM contract prices this year will reach more than 40% between the end of 2020 and the end of 2021.