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Average DRAM Contract Price Fell 15% in July with Price of DDR3 4GB Products Close to US$20 Threshold, TrendForce Reports

5 August 2015 Semiconductors Avril Wu

The latest DRAM price report from DRAMeXchange, a division of TrendForce, finds the average contract price of DDR3 4GB memory products fell 15% from US$24 in June to US$20.5 in July, but the lowest price in the contract market is now at US$20. “The global economy has entered an uncertain period,” said DRAMeXchange’s Assistant Vice President Avril Wu. “This results in downward revisions in performance forecasts across the DRAM industry, from wafer foundry’s capacity utilization rate to mobile phone and notebook shipments. Hence, DRAM prices will certainly sink below US$20 in the third quarter.” 

Wu added that the notebook market will not have its usual peak shipment season in the third quarter because Windows 10 has not generated enough replacement demand to drive notebook sales. TrendForce therefore projects the third-quarter notebook shipments to grow by only 6.1% compared with the prior quarter, which was an off-peak period. Moreover, the 2015 annual notebook shipments have been significantly marked down and will suffer a record drop of 8.3%. From the supply side, the bit output from original DRAM suppliers keeps rising, but the weak global economy has lowered bit consumption, which results in inventory accumulation. In July, the excess DRAM capacity caused contract prices for PC DRAM to drop significantly as well as negatively affecting server DRAM prices, which has declined nearly 10%. 

In terms of manufacturing technologies, Samsung has migrated to the 20 nm process and has the lowest cost structure. Thus, it was still able to remain profitable in July when the average contract price for PC DRAM slid to $US20.5. Micron, on the other hand, still has much of its PC DRAM production on the 30 nm process, and the 20 nm process will not reach a more sizable PC DRAM capacity until the fourth quarter. If the downward price trend continues, Micron will be struggling to maintain profitability for its PC DRAM products in the latter half of the fourth quarter. 

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