[News] Memory Giants Plan DDR5, HBM Expansion; No Immediate Impact on Taiwanese DDR4 Pricing

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The recovery of the memory industry is evident, with Taiwanese companies such as Macronix, Nanya Technology, and Transcend all showing month-on-month revenue growth in December last year. Additionally, contract prices for DRAM and NAND Flash are expected to continue rising in the first quarter of 2024. However, the global second-largest memory manufacturer, SK Hynix, plans a expansion, introducing a variable element to the memory market.

According to a report by the Commercial Times, SK Hynix disclosed that it might reduce the scale of DRAM production cuts in the first quarter, while adjustments to the NAND Flash production strategy may occur in the second or third quarter, depending on the situation.

In response to major memory manufacturers’ expansion plans, Taiwanese memory firms believe that Hynix’s expansion should focus primarily on DDR5 and HBM (High-Bandwidth Memory) products. Nevertheless, Taiwan currently specializes in DDR4 products, and it is not expected to impact product pricing.

According to a press release from TrendForce published this week, the DRAM contract prices are estimated to increase by approximately 13–18% in 1Q24 with mobile DRAM leading the surge. It appears that due to the unclear demand outlook for the entire year of 2024, manufacturers believe that sustained production cuts are necessary to maintain the supply-demand balance in the memory industry.

For consumer DRAM, manufacturers are aggressively raising contract prices, which has prompted buyers to stockpile early. This has greatly improved purchasing momentum. However, the first quarter coincides with the industry’s off-season, and end sales are expected to be weak and lead to increased inventory levels due to buyers’ early stocking strategies.

Manufacturers generally believe that in 2024—with the expanding penetration of HBM and DDR5 each quarter—low-margin DDR4 capacity will be crowded out, thereby leading to shortages. As such, DDR4 contract prices are expected to outpace DDR3 in the first quarter by 10–15%. DDR3 continues to be supplied by Taiwanese manufacturers, and with generally high inventory levels, its contract price increase is estimated at 8–13% for 1Q24.

(Image: SK Hynix)