DRAM prices fall for the first time in 10 months, has the downward cycle begun?

As the shortage situation subsided, the prices of mainstream DRAM products saw their first drop in 10 months. Industry insiders pointed out that DRAM manufacturers have shown a weak position in price negotiations and prices are expected to continue to fall in the future.

According to Nikkei News, the wholesale price of DDR4 8Gb in August fell 2% from July to about US$3.8 per unit, and the price of 4Gb products fell 2% to US$3.1 per unit. The wholesale price of DDR3 2Gb, which was in the most serious shortage, also stopped rising and remained at US$2.5 per unit, the same as in July.

It is understood that due to the shortage of DRAM, manufacturers began to increase production in February this year. It takes about three months from the input of raw materials to production to shipment. The effect of increased production began to show in June, and the market began to change. Coupled with the slowdown in demand for the stay-at-home economy, the DRAM shortage began to subside.

A semiconductor manufacturer stated that DRAM manufacturers have begun to show weakness in price negotiations, while another manufacturer further stated that they have agreed with some customers to reduce prices for September quotations, so it is expected that DRAM prices will continue to fall in the future.

However, Nikkei also pointed out that although DRAM prices tend to fall, the prices of mainstream products are still 50% higher than the same period last year, and DRAM factories can still make profits. The market also generally believes that as long as DRAM factories can still make profits, production will not stop. According to Omdia, DRAM shipments in the third quarter of this year will increase by 12% compared with the second quarter.