As the standard DRAM market experiences an unprecedented cycle of supply-demand imbalance, the shortage of DDR3 production capacity has become even more severe.

According to a report from the Economic Daily News, with leading manufacturers like Samsung exiting DDR3 production, while demand for DDR3 from AI and edge computing devices continuing to increase, the storage capacity per single device is rising sharply. This is expected to drive a rebound in DDR3 prices, potentially benefiting related Taiwanese manufacturers such as Winbond, Elite Semiconductor Microelectronics Technology (ESMT), and Etron.

In response to the shift of operational focus to high-bandwidth memory (HBM) and DDR5, the world’s top three memory manufacturers are gradually phasing out the DDR3 market.

Reportedly, Samsung has informed customers that it will cease DDR3 production by the end of the second quarter. SK Hynix had already converted its DDR3 production at its Wuxi plant in China to DDR4 by the end of last year. Meanwhile, Micron has significantly reduced its DDR3 supply to expand its DDR5 and HBM production capacity.

As per industry sources cited in the same report, it’s said that as the reduction in production by major DRAM manufacturers continues to take effect, it has driven standard DRAM prices up from the second half of 2023 to the present, with further increases expected.

Thus, prices for niche memory like DDR3 tend to lag behind standard DRAM by one to two quarters. For Taiwanese manufacturers such as Winbond, ESMT, and Etron, which focus on DDR3, the benefits of DDR3 price increases will gradually become apparent this quarter and next.

The industry sources cited by the same report also point out that DDR3 applications remain quite widespread. For example, WiFi 6 devices predominantly uses DDR3, and the next generation, WiFi 7 devices, will still primarily use DDR3/DDR4. Additionally, edge computing devices would continue to adopt DDR3. With supply significantly decreasing while demand remaining strong, DDR3 prices are expected to continue their upward trend.

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According to Economic Daily News’ report, the DDR3 market is experiencing a surge in prices, with an almost 10% short-term increase. Contract prices for this quarter are expected to rise by 10% to 15%, with a continued optimistic outlook for the first quarter of next year.

Market analysts point out that global leaders like Samsung, SK Hynix, and Micron currently dominate standard DRAM and NAND Flash. Taiwan-based companies are unable to compete with them in chip production, except for module companies which have the potential to capitalize on the rebound of the DRAM and NAND market due to their advantage of low-cost inventory.

On the other hand, DDR3 production remains primarily under Taiwan’s purview, and the price surge is significant, providing substantial assistance to Taiwanese memory industry players.

Industry sources indicate that the main impetus behind the current memory market upswing stems from the continual reduction in production by major international manufacturers. With tightening capacities, they are strictly controlling shipments, displaying their determination to support the price increases.

Besides, companies like Samsung, SK Hynix, and Micron are actively venturing into AI applications, shifting their main capacity to produce high-bandwidth memory, DDR5, and other advanced areas. This shift has created room in the DDR3 market. Recent replenishment of inventories on the client end, along with a surge in orders for consumer electronics, has been witnessed.

TrendForce indicated that DDR3 prices have been steadily rising since September. The cumulative increase for DDR3 4Gb has reached nearly 10%, while DDR3 2Gb has shown a cumulative rise of 14%; regarding contract prices, TrendForce expects a robust increase of 10% to 15% for this quarter, with a continued strength forecasted for the first quarter of next year, likely to rise another 5% to 10%.

DDR3-related companies are optimistic about market developments. Etron believes that with inventory digestion coming to an end, “the cyclical bottom is over,” and they are gradually heading towards the dawn of recovery. They hold a positive outlook for significant growth in the global DRAM market next year.

ESMT, on the other hand, continues to advance the progress of their in-house products. They are continuously developing new products in DRAM, Flash, and MCP, expanding into different markets. This includes accelerating the development of 19-nanometer DRAM, achieving mass production of 28-nanometer NAND Flash, and researching niche memory products for automotive applications.

Winbond’s General Manager, Pei-Ming Chen, points out that their operations for this quarter will be better than the third quarter and they have a positive view of the DRAM market for next year.

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