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Average Contract Price for DRAM Rose 7% Monthly in September and Will Hit Two-Year High in Fourth Quarter, Says TrendForce

3 October 2016 Semiconductors Avril Wu

The global average contract price of PC DRAM rose 7.4% monthly in September to US$14.5 as DRAM makers adjusted their product mixes and caused PC DRAM supply to tighten significantly, says DRAMeXchange, a division of TrendForce. In the fourth quarter, the average contract price of PC DRAM will reach its highest point in two years due to stronger-than-expected notebook demand worldwide. The anticipated quarterly increase in the average contract price will be at almost 30%.

“The price hike in the spot market for DRAM chips has been more significant,” said Avril Wu, research director of DRAMeXchange. “In September, the average spot prices of 4Gb DDR3 and DDR4 chips rose 19% and 15% respectively compared with the prior month to US$2.1 and US$2, indicating that the market demand continues to outpace supply.”

In the third quarter, the DRAM industry expanded the share of mobile DRAM in its overall output to 40%, which in turn squeezed the share of PC DRAM in the overall output to under 20%. At the same time, the stock-demand from notebook and smartphone clients was at its peak. The number of new notebooks carrying 8GB DRAM modules (especially enterprise models) has increased sharply ahead of the peak sales season at the end of the year.

“Since the third quarter, PC-OEMs have become more willing to accept premium prices for PC DRAM as to secure the volumes they need,” Wu pointed out. “In the fourth quarter, the PC DRAM market will witness an even larger price hike. The undersupply problem will worsen as well due to DRAM makers underestimating the increase in demand.”

Wu added that PC-OEMs were already finalizing their fourth-quarter DRAM contracts in September due to the tightening of supply: “Price negotiations for fourth-quarter contracts occurred earlier this year because DRAM suppliers have hastily shifted a large portion of their manufacturing capacities from making PC DRAM to producing products for the server and mobile markets.”

Furthermore, some suppliers have not raised the yield rates for their 20nm and 21nm processes to expected levels. This means that the industry’s overall PC DRAM output is unlikely to even satisfy the originally estimated demand. Under the circumstances, PC-OEMs are frantically building up their DRAM inventories. 

Simultaneous shortages in the NAND Flash market will lead to a 10~15% price increase for eMCP products in the fourth quarter

“The intense competition for PC DRAM supply is causing price hikes for other memory products as well,” added Wu. “The global average contract price of server DRAM has risen by 10% since the start of the third quarter.”

At the same time, the NAND Flash market is experiencing shortages. In the fourth quarter, the average selling price of eMCP will increase by 10~15% versus the prior quarter.

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