Global memory giants continue to reduce production, coupled with the situation where market demand is increasing due to the rise in artificial intelligence and high-performance computing applications, as well as inventory replenishment from the smartphone market. This combination is driving a continuous increase in memory prices, especially the astonishing surge in NAND Flash.

According to a report from TechNews, there are once again rumors in the market today that the upward trend in DRAM prices is resurfacing. This includes plans from both Samsung and Micron to implement a price increase ranging from 15% to 20% in the first quarter of 2024.

Currently, the market anticipates tight DRAM supply in 2024 due to the increasing adoption of artificial intelligence and high-performance computing, along with a gradual recovery in the smartphone and PC markets. As the contract price negotiation for the first quarter is underway, industry sources reveal that memory manufacturers have begun adjusting DRAM prices since January, urging customers to plan for future usage demands.

There are reports in the market that Samsung recently announced that DRAM prices will increase by at least 15% starting in the first quarter of 2024. While there is no clear indication of the NAND Flash memory price hike at the moment, it is expected to continue to rise. The upward trend in DRAM prices is expected to persist until the end of 2024.

Apart from Samsung, Micron, with a modest 2-3% increase in DRAM prices in December 2023, lower than the 10% increase in 3D TLC NAND, is reportedly considering a DRAM price hike of around 15-20%.

Regarding the price trend of DRAM in the first quarter of 2024, TrendForce currently maintains a forecast of a seasonally increased average of 13-18%, with the highest increase observed in the mobile DRAM category, while server DRAM appears relatively conservative. According to TrendForce’s observation, due to the uncertain demand outlook for the entire year 2024, memory manufacturers believe that a continued reduction in production is necessary to maintain the supply-demand balance in the memory industry.

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• Market Anticipates a 50% Price Surge for NAND Flash in Short-Term

(Image: Samsung )

The ongoing reduction in production by major manufacturers throughout this year has gradually restored balance to the market supply and demand. This is beneficial for chip manufacturers to regain control over prices. Signs of a bottoming out and rebound have emerged in the memory market in the third quarter of this year.

TrendForce data reveals that the overall price of DRAM has been declining since 4Q21 and only began to rebound in 4Q23, marking a total decline over 8 quarters. As for NAND Flash, the overall price started declining from 3Q22 and began to rebound from 3Q23, totaling a decline over 4 quarters.

However, despite the recovery in demand, achieving effective destocking and returning to a state of supply-demand equilibrium next year still heavily relies on suppliers exercising restraint in production capacity. If suppliers can control production capacity appropriately, there is a chance for the average memory prices to continue their rebound.

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• [News] Market Anticipates a 50% Price Surge for NAND Flash in Short-Term
• [News] Improvement in Memory Inventory Leads to First Price Increase in Two and a Half Years

(Photo credit: Samsung)

After a rebound from the decline in NAND prices, the current quotations still show a gap from reaching the breakeven point for suppliers such as Samsung, Kioxia, SK Hynix, and Micron.

Major domestic players in the NAND Flash industry indicate that NAND Flash suppliers, driven by the goal of profitability, will continue to aggressively raise prices. It is anticipated that prices will need to increase by over 40% once again for major manufacturers to break even. To achieve profitability, future price hikes are expected to be at least 50% or even higher, according to Economic Daily News.

Looking at the global NAND Flash market share in 3Q23, according to a report from TrendForce, Samsung holds the leading position with a market share of 31.4%. The second position is held by the SK group, with a market share of 20.2%, followed by the U.S.-based Western Digital at third place with a market share of 16.9%. The Japanese company, Kioxia ranks fourth with a market share of approximately 14.5%.

The industry indicates that due to the lower profitability of NAND Flash compared to DRAM, international giants are actively reducing NAND Flash production.

Taking Samsung as an example, since September of this year, the reduction in NAND chip production has expanded to 50% of total capacity, focusing on products with stacked layers up to 128 layers. The goal is to accelerate destocking and stabilize prices, with plans to gradually increase prices in 2024.

TrendForce has indicated that following Samsung’s expansion of the production reduction to 50%, other suppliers are also maintaining a restrained wafer allocation strategy. After more than half a year of production reduction in some processes and capacities, there is a structural supply shortage, providing an advantage for chip manufacturers in price control. Observing the market in the fourth quarter, there are almost no low-priced sources available for purchase. However, buyers still tend to maintain high inventory levels and continue purchasing.

Industry sources revealed that the NAND chip prices had plummeted too deeply before. Although the quarterly increase in contract prices seems substantial, there is still a distance for chip manufacturers to achieve a turnaround. It is expected that prices need to increase by another 40% to allow suppliers to cross the breakeven point. Therefore, prices are expected to be quite strong in the coming quarters.

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• NAND Flash Industry Revenue Grows 2.9% in 3Q23, Expected to Surge Over 20% in Q4, Says TrendForce
• [Insights] Memory Spot Price Update: Modest DRAM Increase; NAND Flash 512Gb Premium Fades

(Photo credit: Samsung)

TrendForce releases the latest memory spot prices, with DRAM showing limited price increases due to sluggish trading momentum. On the other hand, NAND Flash is affected by inventory dynamics, leading to a gradual elimination of the premium for 512Gb. Details are as follows:

DRAM Spot Market:

In the spot market, the price decline caused by used chips extracted from decommissioned modules has shown signs of easing. The overall price trend is now relatively stable. With the winter holidays in North America and Europe, spot trading activities have slowed down. However, due to the market consensus that contract prices will rise in 1Q24, some buyers are stocking up, resulting in relatively insignificant increases in spot prices. The average spot price of mainstream DRAM chips (i.e., DDR4 1Gx8 2666MT/s) rose by 0.34% from US$1.747 last week to US$1.753 this week.

NAND Flash Spot Market:

Several suppliers, having witnessed the price hike of wafers that lasted for a few consecutive months, are starting to release their stocks since this week. The previous destitution in product availability has thus been slight remedied. 512Gb is currently sitting on about US$3.2, and is approaching to its contract price under a slow dissipation in premium, with the focus of subsequent observations being whether purchase dynamics would further deteriorate. 512Gb TLC wafer spots have risen by 1.72% this week, arriving at US$3.128.

In the latest financial report and guidance released on the 20th, U.S. memory chip giant Micron outperformed analysts’ expectations for both the last quarter and the current quarter. CEO Sanjay Mehrotra believes that product pricing will rebound next year, with the upward trend continuing until 2025, as Micron aims to return to a path of operational innovation and reach new record levels by 2025, according to The Economic Daily.

Mehrotra anticipates a price recovery in memory prices next year, and rise further in 2025. He reiterated in a statement that 2024 will be a year of recovery for the memory industry setting the stage for record results in 2025.

Micron expects the supply of PC, mobile devices, and other chips to approach normal levels in the first half of next year. Despite two consecutive years of declining PC shipments, Micron forecasts low to mid-single-digit percentage growth in 2024, with signs of a recovery in smartphone demand.

TrendForce also anticipates that the upward momentum in DRAM products is expected to continue until 2025.

The reason behind this is the continuous benefit to the DRAM market from the increasing penetration of premium products such as HBM, DDR5 and LPDDR5. This is expected to have a positive impact on the overall memory prices.

Simultaneously, TrendForce believes that 2025 will witness the emergence of more edge AI applications, such as AI on smartphones or PCs. This is expected to result in an increase in DRAM capacity, becoming the driving force for the next wave of growth in DRAM demand.

(Image: Micron)