DRAM Chips's price close to raw material cost? Dawn is ahead!!!

According to the Nikkei news report, due to the decrease in demand for PCs and smartphones, the price of DRAM has fallen for 12 consecutive months, and it is reported that the current price is close to the cost of materials, and even if the price bottoms out later, it may not show a sharp rise.

In April 2023, the wholesale price of the index product DDR4 8Gb is about US$1.48 each, down 1% from the previous month (March 2023); the price of 4Gb products with a smaller capacity is about US$1.1 each , down 8% from the previous month. Both 8Gb and 4Gb prices fell for the 12th consecutive month. DRAM wholesale prices are determined monthly or quarterly between storage vendors and customers.

The report pointed out that storage manufacturers are currently speeding up inventory adjustments. Micron, SK Hynix, and Samsung have all announced reductions in production, but usually DRAM production takes 3 months, so Samsung, which cut production at the latest, will not be able to evaluate the effect until after July.

Market sources pointed out that "the current price is approaching the cost of raw materials." Demand is still weak, and manufacturers may continue to cut prices in order to maintain market share. According to Japan Electronics Trading Company, "Even if the price bottoms out between the end of this year and next year, it is not expected to show a sharp rise."

When will the inflection point come? Dawn may be ahead.

According to a TrendForce report, global demand for DRAM chips is expected to exceed supply as early as July, a change that will ease the pressure on semiconductor companies struggling due to chip downturns.

In addition, it is expected that global DRAM demand will exceed 105.4 billion 2GB chips this year, exceeding the estimated supply of 104.3 billion.

It is worth mentioning that TrendForce also recently adjusted the oversupply of memory chips this year: among them, the forecast for DRAM was adjusted from 0.9% to -1%, and the forecast for NAND Flash was lowered from 3%. -0.5% - a positive value means oversupply, a negative value means the opposite.

From the demand side, although the demand for PCs and smartphones was small in the early stage, the orders for AI server DDR5 have been pouring in recently, and the demand for high value-added DRAM such as HBM and DDR5 has also continued to rise. Urgent orders have already appeared in some demand fields of memory manufacturers, and customer demand has recovered, and urgent orders have poured in, and "there is a lot of volume."

Under such circumstances, TrendForce has also recently raised its 2Q average price forecast for 32GB DDR5 from US$75 to US$80-90.

The chairman of Nanya Branch said that since the second quarter of DRAM, some market inventories have been eliminated, and suppliers have reduced capital expenditures. In the second half of the year, the inventory of end products may become normal, and the DRAM market may gradually improve. The chairman of Etron revealed that the inventory level of the DRAM industry has begun to shrink. Under the trend of decreasing output of storage original factories, half of the company's niche DRAM customers are "active" at this stage, and it is expected that this proportion will return to 100% by the end of the year. Among them, the recovery in the field of display is more significant. In addition, the price of DRAM products has also stabilized.

The China National Finance Securities Research Report stated that on the price side, memory prices have fallen below the lowest level in history, and the potential price decline is small. On the supply side, the inventory of original manufacturers has begun to decrease, and the inventory of module manufacturers has gradually bottomed out, and the effect of proactive destocking is obvious. On the demand side, the launch of new-generation CPUs for servers and increased demand for AI will increase the demand for high-performance products such as DDR5 and HBM and high-density modules. Storage prices are expected to gradually approach the bottom of the down cycle, and it is optimistic that the storage sector will stop falling in the second and third quarters of 2023.