The production cuts implemented by DRAM suppliers have led to a gradual decrease in the supply of DRAM, according to a report from TrendForce.
Seasonal demand has helped alleviate some of the pressure on DRAM suppliers’ inventory. The average selling price (ASP) for DRAM is expected to decline by 0-5 percent in the third quarter of 2023. Despite the suppliers’ efforts, inventory levels remain high, keeping prices low. It is projected that a significant recovery in prices may not be observed until 2024.
In the PC DRAM sector, the positive effects of production cuts on DDR4 by the top three suppliers are anticipated to become evident in the third quarter. Additionally, aggressive purchasing by several original equipment manufacturers (OEMs) at low prices during the second quarter has partially relieved inventory pressure on suppliers. However, DDR4 is expected to continue experiencing oversupply, leading to a quarterly price drop of 3-8 percent. Prices of DDR5, influenced by suppliers’ price maintenance efforts and unmet buyer demand, are projected to decline by 0-5 percent per quarter. Consequently, the ASP of PC DRAM is forecasted to decline by 0-5 percent in the third quarter.
In the server DRAM market, high buyer inventories and a slower-than-expected transition to new platforms have contributed to a weak pricing trend. Despite increased investment in AI server equipment by cloud service providers (CSPs), resulting in the procurement of high-capacity server DRAM like DDR5 128G and HBM, server DRAM inventories have not significantly decreased. The prices of DDR4 and DDR5 are expected to decline by approximately 3-8 percent and 0-5 percent respectively, leading to an average decline of 0-5 percent in server DRAM prices in the third quarter.
For mobile DRAM, although smartphone demand was weak in the first half of the year, the traditional peak season and production cuts by suppliers are expected to drive up demand. However, these measures will have limited impact on reducing suppliers’ inventory levels. Past price declines have reached a baseline level for suppliers, prompting Korean firms to increase mobile DRAM prices. Nevertheless, due to oversupply, a standoff between buyers and sellers has emerged. The ASP of mobile DRAM is predicted to decline by 0-5 percent in the third quarter, with sporadic price increases potentially occurring due to strategic moves made by suppliers.
In the graphics DRAM market, the release of the NVIDIA RTX 40 series and the traditional peak season are expected to boost demand, particularly for GDDR6 16Gb, during the third quarter. However, as buyers have already accumulated substantial inventory in the second quarter, suppliers may struggle to raise prices in an oversupplied market. Therefore, the market price of mainstream GDDR6 16Gb is projected to decline by 0-5 percent quarterly, aligning with the approximate 0-5 percent decline in the ASP for graphics DRAM.
The consumer DRAM market is currently experiencing a slow pace of transactions. SK hynix plans to expand the supply of DDR3 and DDR4 4Gb at its Wuxi fab, gradually increasing production capacity. Additionally, Winbond is moving into the mass production stage, with an expected increase in wafer input each quarter. Despite these efforts, the consumer DRAM market continues to face oversupply challenges. However, as suppliers progressively reduce production, the benefits are expected to materialize in the third quarter. Considering the substantial operating losses incurred by these suppliers, these factors should help limit the decline in ASP for consumer DRAM to 0-5 percent in the third quarter.