DRAM including DDR5 & DDR4 memory is seeing a production cut from leaders in the field, such as Micron and SK Hynix, reports TrendForce. During this first quarter of the year, the average selling price (ASP) of DRAM dropped as high as 20% but is anticipated to become much less in the second quarter by 10-15%.
DDR5 & DDR4 DRAM costs continue to drop as inventory levels increase, and they may not become better anytime soon
With the price drops comes uncertainty as it is unknown if the demand will return to its rightful place within the second quarter or continue to decline. Manufacturers have had to lower the ASP to meet the needs of the customers and clients, but the industry shows that supplier inventory levels are at an all-time high. Unless the production lowers, the prices will not return to normal.
TrendForce broke down the price projections for DRAM products during the first and second quarters of 2023 in the below graph.
The analytic company broke down each sector, explaining the decline for each.
- PC DRAM: Due to the stagnant marketplace, sellers have requested much less from manufacturers over the last three quarters. Most retailers show as much as thirteen weeks of stock still sitting on shelves and in backstock. Even with suppliers limiting production to counterbalance the lack of sales, specific DRAM memory modules, such as 8GB DDR4 memory, are anticipated to plummet over ten percent during this second quarter. PC OEMs can use the lower cost to their advantage by purchasing more DRAM for their wares, but it is unknown if it will be enough for the suppliers to fix the inventory issues. The predictions from analysts mark the PC DRAM ASP to decline between ten to fifteen percent.
- Server DRAM: Inventory management has slowed due to the demand for server DRAM from OEMs and cloud service providers. Customer demand appears bleak, signaling suppliers to adjust the server DRAM ratio and increase shipment quantities. This has caused up to a twenty-five percent increase in inventory during the first quarter. While suppliers' efforts to lower capacity utilization rates it has not seemed to affect enough to make a difference, even with the lower costs. TrendForce predicts that server DRAM ASP will continue to decline as much as eighteen percent in the second quarter of 2023.
- Mobile DRAM: The mobile DRAM sector is the only area that has returned to a better ASP level than all other sectors. This is due to manufacturers being much more conservative with production over the last few quarters. However, it is analyzed that this will become more constricted during the second quarter of this year. Suppliers must sell as much of their remaining stocks as possible, which raises an enormous challenge. But, despite the obstacles, TrendForce anticipates only a ten to fifteen percent decline.
- Graphics DRAM: With AI being such a prominent (and often overused buzzword), it has had little effect on demand. TrendForce will anticipate a ten to fifteen percent quarter-over-quarter (QoQ) decline. Graphics DRAM is slowly adopting the 16 GB memory, with Samsung's GDDR6 reaching the end of its manufacturing run at the end of 2023. This will leave manufacturer SK Hynix as the only company to develop 8GB memory products. TrendForce adds that "rolling back production could finally present an opportunity for the price of GDDR6 8 Gb to stop fluctuating aggressively."
- Consumer DRAM: Networking device demand has remained nominal, but retailers have begun to refuse accepting more higher inventory levels now that the market has leveled. The estimated analysis shows that despite buyers being conservative over the last few months, supply continues to overtake demand, even with production slowing down. The prediction for consumer DRAM ASP will lower to as much as fifteen percent in 2023.
The future is bleak, with demand being lowered overall in all markets, not just the DRAM marketplace. It will be interesting to see these numbers again entering 2024.
News Source: TrendForce
