Although the storage industry has recovered, the tight supply and rising prices are mainly seen in the DDR5 and HBM sectors. So far, DRAM designers and manufacturers have not significantly benefited.
Manufacturers indicate that by the second half of 2024, DDR3 and DDR4 are expected to fully recover above the total cost of chips, moving towards profitability. Moreover, if the consumer market demand can keep up, by this time in 2025, DDR3 and DDR4 prices may return to pre-pandemic levels, effectively doubling.
Although the storage industry has officially flipped from a downturn to an upturn from the fourth quarter of last year to the first quarter of this year, the popular products are concentrated in DDR5 and HBM, especially with AI causing a tight supply of HBM. However, the situation for DDR3 and DDR4, which are more closely linked to the general consumer market, is not as expected. Overall, the contract prices from January to May have increased by about 10%.
Industry analysts say this is mainly because Samsung and Micron are still supplying, and the demand side is still holding back, unwilling to make large purchases, which means that although DDR3 and DDR4 have seen some recovery, it is not as strong as expected.
In terms of the price of a single DDR3 chip, it has currently risen above the cash cost in the cost structure, but not yet above the total cost for some customers. However, prices will continue to rise in the third quarter, and by then, the price of a single DDR3 chip will reach above the total cost, formally entering full profitability.
There is still an issue with DDR3 in that major international manufacturers have not completely exited the market. Although Samsung has notified customers of a complete exit, the timeline has not yet been reached, and they are still shipping. The key is that Samsung needs to clear its inventory and ship everything to downstream customers. Prices will only rise once Samsung stops shipping.
Micron’s movements are not entirely clear. For DDR3, some are supplied to the consumer market and some are for automotive use. For automotive use, Micron will move customers to DDR4, making it harder to find opportunities. The consumer segment has more opportunities.
During the COVID-19 pandemic, DDR3 and DDR4 prices roughly halved. Although the rebound in the first half of this year was not as expected, it has shown a gradual upward trend. It is expected that the increase in the second half of the year will be better than the first half, and with a boost from a recovery in end-consumer demand, there is a chance that prices will return to pre-pandemic levels by this time next year.
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- Global Storage Market: DDR4 Price Hike Forecast in late 2024
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