According to the latest analysis from the DRAMeXchange research division of TrendForce, Q4 DRAM ASP is as of yet undergoing a slight QoQ decline, but this decline has shrunk down to 5%. In contrast, the total trading volume in October has seen considerable QoQ growth, which demonstrates an increased willingness to pay on the purchasers’ part. Once suppliers’ inventory levels have sufficiently lowered, they will no longer need to cut prices to encourage further sales. These factors have the potential to help DRAM prices stabilize and recover in 2020.
Samsung’s plan to expand its production capacity and Chinese DRAM manufacturers’ wafer start in 2020 are both factors that may impact DRAM market supply. However, TrendForce believes that Samsung will not increase its wafer capacity in 1H20, since the majority of its capital will be invested in new, 1Znm process-capable equipment. On the other hand, SK Hynix recently reiterated a reduction in capital spending next year, which will directly result in the relative slowdown of bit supply growth in 2020 compared to 2019. As well, Micron Technology is projected to have a comparatively moderate expense model next year, although it has yet to make any official announcements.
In relation to the continuing development of the Chinese DRAM industry, we hold a conservative outlook toward its initial production capacity planning, despite the year-end mass production announced by Hefei-based CXMT. Furthermore, the Chinese DRAM industry needs time to acclimatize itself to the learning curve involved in optimizing production. As a result, Chinese vendors will not significantly contribute to the global bit supply in 2020.
Spot market has slackened recently and seen prices reach new lows this year
Contrary to the contract market, the spot market is exhibiting a sluggish forward momentum, thanks to the drastic reduction in its trading volume. Because of this, spot prices are easily – and substantially – swayed by market news, case in point, the sustained DRAM price hike caused by the Japan-South Korea trade dispute. As the Japanese government gave formal approval to export chemical materials to Korea, this eliminated the market uncertainty regarding DRAM supply and subsequently induced a gradual, but daily, drop in spot prices, which reached a new low at the end of October since the July price hike.
TrendForce believes that the current pricing trajectory of spot markets is well within the projected range. If contract prices remain stable, and the demand side manages to avoid drastic cuts, then the stagnant spot price trajectory in the short term will have no impact on the development of DRAM market in the foreseeable future.