Thursday March 07, 2019

DRAM Prices See Sharpest Decline Since 2011

If you're a regular at HardOCP, you've probably heard that memory prices are dropping like a rock. As we've reported before, a number of factors, including reduced smartphone demand, excess inventory, the Intel CPU shortage, and a stable "bit output" thanks to advancing lithography tech are quickly bringing down DDR4 prices, in spite of manufacturers' efforts to slow down production. However, DRAMeXchange reports that there was a "a most unusual, large down-correction in prices" last February. DRAM contracts are now monthly instead of quarterly deals, and DRAMeXchange revised their first quarter price drop projection to 30%. Looking farther ahead, the market research firm notes that suppliers are holding "around a whopping six weeks' worth of inventory (wafer banks included)," and that the Intel CPU shortage is expected to last until 3Q19, hence the down-corrections are expected to continue throughout the year.

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Looking at the DRAM market one or two years into the future, the big trio aren't going to roll over in the competition for market shares any time soon. SK Hynix has recently announced that it will invest 120 trillion won (around US$107 billion ) to build four new wafer fabs as part of its strategy to improve its competitiveness. Micron, on the other hand, doubled down and commenced construction of an IC testing and packaging plant in Taiwan. At the same time, its subsidiary Micron Memory Taiwan ( formerly Rexchip) in Houli, Taichung, is considering building a new 12-inch DRAM wafer fab, which could finish construction as early as the end of next year, and massively contribute to production in 2021. As for the world's largest DRAM supplier Samsung, it is currently building a second fab at Pyeongtaek. "The rich stay rich" - such is the immutable trend of the DRAM market; furthermore, new competitors are aided by a wealth of resources and capital upon entering the market. Hence, if smaller DRAM suppliers don't find ways to catch up on production processes and scale, they may risk being marginalized in the near future.