[News] Improvement in Memory Inventory Leads to First Price Increase in Two and a Half Years

2023-12-26 Semiconductors editor

After more than two years of stagnation in the memory market, which was exacerbated by production cuts from major players like Samsung and Micron earlier this year, the issue of overstock has finally seen improvement.

As per Nikkei’s report, this has driven an increase in prices for DRAM, marking the first such occurrence in nearly two and a half years. Observers are optimistic that the memory market will hit bottom this year, with a recovery and growth expected in 2024.

According to TrendForce’s data, the contract price for the DDR4 8GB, considered a benchmark product for DRAM, reached USD 1.50 in October, a 15.4% increase from September and the first increase since July 2021. The contract price for the same product continued to rise in November by 10%, reaching USD 1.65.

In addition to the DDR4 8GB product, other specifications of DRAM contract prices generally experienced monthly increases of around 10% in October this year. Generally, memory contract prices are determined collaboratively by chip suppliers and corporate customers, and an increase in contract prices signifies an advantage for suppliers.

There are signs of a bottoming out and rebound in the DRAM market in the third quarter of this year. TrendForce indicated that the global DRAM market’s revenue increased by 18% compared to the previous quarter, reaching USD 13.48 billion.

This growth, reportedly, is primarily attributed to production cuts by major suppliers throughout the year, gradually restoring balance to the market supply and demand.

The report also reflects on the pandemic period, noting that the global surge in remote work initially led to a sharp increase in demand for memory. However, as the pandemic gradually subsided in 2021, market demand cooled.

Additionally, persistent challenges such as high inflation and interest rates impacting consumer spending weakened demand for PCs and various consumer electronic devices. This, in turn, led to global oversupply in memory, causing prices to decline consistently.

Major DRAM manufacturers, including Samsung, SK Hynix, and Micron, have been reducing production since the beginning of this year, and they have recently managed to reverse the downturn.

Samsung reported a 16% revenue growth in the third quarter, while SK Hynix achieved an impressive growth rate of 34.4%. Despite a decline in average selling prices, Micron’s third-quarter chip shipment growth contributed to an overall revenue growth of 4.2%.

Moreover, the global NAND Flash market saw a 2.9% sequential increase in revenue in the third quarter, and a growth rate of 20% is anticipated for the fourth quarter, according to TrendForce’s latest research.

Read more

(Photo credit: Samsung)

Please note that this article cites information from Nikkei