Adata Chairman Chen Libai expressed continued optimism about the DRAM market over the next two years. In addition to the ongoing rise in DDR5 prices, DDR4 prices are expected to enter a second wave of increases starting in August, with an expected rise of at least 30% as inventory depletion concludes. The company has low-cost inventory, and first-quarter profits were modest, with more impressive results anticipated later.
There is a divergence between the DRAM contract and spot markets. Spot prices were slightly suppressed in May and June, but contract prices remained unaffected and are expected to rise in the second half of the year.
Market demand is lukewarm, leading small and medium-sized manufacturers to sell in the spot market for cash flow, causing the divergence between spot and contract prices. After this impact subsides, the market is expected to become more stable and healthy.
Currently, HBM supply is very tight, and the situation is likely to remain in short supply throughout 2024 and 2025. The three major manufacturers are reallocating their production capacities, and there is already a noticeable crossover in the market share of DDR5 and DDR4. With suppressed DDR4 capacity, its supply will further decrease, shifting support to HBM and DDR5.
The three major manufacturers’ DRAM inventories are healthy, and contract market demand is strong, especially in data centers and servers. The spot market is relatively slower, as the first demand point has been met. However, there is no need to worry about DRAM prices, as the heavy consumption of capacity by HBM will inevitably drive DDR5 and DDR4 prices up each quarter.
DDR4 is particularly promising due to its currently limited price increase. Following inventory depletion and supply constraints, a new wave of price increases is expected to start in August, with a potential rise of over 30%. DDR5 demand is robust, with contract prices leading market trends, anticipating some price increases, though not as significant as DDR4 due to the relatively high base price, and prices will not fall.
Regarding NAND Flash, supplier capacity is increasing. If suppliers do not adequately adjust capacity to market conditions, the future market for NAND Flash could be adversely affected. Prices may adjust in the third quarter.
The focus is mainly on changes in manufacturer capacity, which will influence the market trends in the second half of the year.
Regarding inventory, Adata’s inventory at the end of the first quarter was NT$19.7 billion. It is expected that inventory at the end of the second quarter will be similar to the previous quarter, as the company remains optimistic about the second half of the year and continues to build up inventory, primarily in DRAM, with DDR4 and DDR5 each accounting for half.
This year marks the beginning of the AI era, primarily in the server sector. AI-driven edge device demand, such as AI PCs and AI phones, will see some volume starting in the fourth quarter of this year, with significant increases expected next year, particularly in the memory capacity of AI phones.
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