TrendForce reports indicate a universal price increase for both DRAM and NAND Flash starting in the fourth quarter. DRAM prices, for instance, are projected to see a quarterly surge of about 3-8%. Whether this upward momentum can be sustained will hinge on the suppliers’ steadfastness in maintaining production cuts and the degree of resurgence in actual demand, with the general-purpose server market being a critical determinant.

PC DRAM: DDR5 prices, having already surged in the third quarter, are expected to maintain their upward trajectory, fueled by the stocking of new CPU models. This forthcoming price hike cycle for both DDR4 and DDR5 is incentivizing PC OEMs to proceed with purchases. Although manufacturers still have substantial inventory and there’s no imminent shortage, Samsung has been nudged to further slash its production. However, facing negative gross margins on DRAM products, most manufacturers are resistant to further price reductions, instead pushing for aggressive increases. This stance sets the stage for an anticipated rise in DDR4 prices by 0–5% and DDR5 prices by around 3–8% in the fourth quarter. Overall, as DDR5 adoption accelerates, an approximate 3–8% quarterly increase is projected for PC DRAM contract prices during this period.

Server DRAM: Buyer inventory of DDR5 has climbed from 20% in Q2 to 30–35% recently. However, with only 15% being actually utilized in servers in Q3, market uptake is slower than expected. Meanwhile, Samsung’s intensified production cutbacks have notably shrunk DDR4 wafer inputs, causing a supply crunch in server DDR4 stocks. This scenario leaves no leeway for further server DDR4 price reductions. In response, manufacturers, aiming to enhance profits, are accelerating DDR5 output.

Looking ahead, Q4 forecasts anticipate stable server DDR4 average prices, while server DDR5 is set to maintain a declining trajectory. With DDR5 shipments on the rise and a notable 50-60% price disparity with DDR4, the blended ASP for the range is poised for an upswing. This leads to an estimated 3–8% quarterly hike in Q4 server DRAM contract prices.

Mobile DRAM: Inventories have bounced back to healthy levels sooner than other sectors, thanks to price elasticity driving an increase in per-device capacity, and revitalizing purchasing enthusiasm in 2H23. On the other hand, although Q4 smartphone production hasn’t reached the previous year’s levels for the same period, a seasonal increase of over 10% is still supporting demand for mobile DRAM. However, it’s crucial to note that current manufacturer inventories remain high, and production cuts haven’t yet altered the oversupply situation in the short term. Nevertheless, manufacturers, under profit margin pressures, are insisting on pushing prices upward. For products where inventory is more abundant, such as LPDDR4X or those from older manufacturing processes, the estimated contract price increase will be about 3–8% for the quarter. In contrast, LPDDR5(X) appears to be in tighter supply, with projected contract price increases of 5–10%.

Graphics DRAM: A niche market dynamic and an acceptance of price hikes among buyers suggest sustained procurement of mainstream GDDR6 16Gb chips, preparing for expected price increases in 2024. The launch of NVIDIA’s new Server GPU L40s in the third quarter is facilitating the depletion of existing manufacturer inventories. Furthermore, gaming notebooks are excelling in sales, surpassing the general notebook market this year. Consequently, manufacturers are experiencing less inventory stress for graphics DRAM than they are for commodity DRAM. This landscape sets the stage for an anticipated 3-8% hike in graphics DRAM contract prices for the fourth quarter.

Consumer DRAM: Samsung initiated significant production reductions starting in September to diminish its surplus of older inventory. These cuts are projected to hit 30% by the fourth quarter. With the anticipation of steadily declining inventories, manufacturers are looking to increase consumer DRAM contract prices, aiming for hikes of more than 10%, to avoid incurring losses. However, even though some producers raised their prices at September’s close, demand continues to be lackluster, with purchasing and stock-up efforts not as strong as anticipated. This deviation in pricing goes against the expected supply-demand balance, suggesting a more modest estimated rise of 3–8% in consumer DRAM contract prices for the fourth quarter—below manufacturers’ initial targets.

The stay-at-home economy remains robust due to the ongoing COVID-19 pandemic, so the sales of gaming products such as game consoles and the demand for related components are being kept at a decent level, according to TrendForce’s latest investigations. However, the values of cryptocurrencies have plummeted in the past two months because of active interventions from many governments, with the graphics DRAM market entering into a bearish turn in 3Q21 as a result. While graphics DRAM prices in the spot market will likely show the most severe fluctuations, contract prices of graphics DRAM are expected to increase by 10-15% QoQ in 3Q21 since DRAM suppliers still prioritize the production of server DRAM over other product categories, and the vast majority of graphics DRAM supply is still cornered by major purchasers.

It should be pointed out that, given the highly volatile nature of the graphics DRAM market, it is relatively normal for graphics DRAM prices to reverse course or undergo a more drastic fluctuation compared with other mainstream DRAM products. As such, should the cryptocurrency market remain bearish, and manufacturers of smartphones or PCs reduce their upcoming production volumes in light of the ongoing pandemic and component supply issues, graphics DRAM prices are unlikely to experience further increase in 4Q21. Instead, TrendForce expects prices in 4Q21 to largely hold flat compared to the third quarter.

Sudden drop in ETH prices led to plummeting GDDR5 and GDDR6 spot prices

Recent observations on the spot trading of graphics DRAM products indicate that the changes in this market closely correlate to the changes in the value of ether (ETH) because graphics cards are the crucial tool for processing the mining algorithm of this cryptocurrency. ETH prices fell by more than 50% within a two-month span as a result of the latest measures enacted by regulatory agencies around the world to suppress the speculation of cryptocurrencies. Accordingly, cryptocurrency miners’ and investors’ interest in ETH has also diminished significantly. The plunging demand from cryptocurrency miners also means that a substantial number of graphics cards are being pushed into the second-hand market. TrendForce’s investigation shows that spot prices of graphics cards have fallen by about 20-60% over the past month or more. The differences in the magnitude of decline depends on brand and technology generation. Furthermore, the across-the-board decline in spot prices of graphics cards has also severely constrained the spot demand for graphics DRAM.

According to TrendForce’s understanding, even though spot prices are still higher than contract prices for GDDR6 chips, the difference is rapidly shrinking. This, in turn, will have an adverse effect on the general price trend of GDDR6 chips in the future. The trading is even more subdued for GDDR5 chips that are used in the earlier generations of graphics cards. Spot prices are now actually about 20% lower than contract prices for GDDR5 chips. The difference here indicates that there is a glut of older graphics cards, and the GDDR5 chips that are embedded in them are no longer in high demand.

Contract prices of graphics DRAM are expected to increase by nearly 15% for 3Q21 as graphics DRAM suppliers’ fulfillment rate remains relatively low

Regarding the contract market for graphics DRAM, the sell-side has considerable leverage in price negotiations as these suppliers prioritize the production of server DRAM ahead of other product categories. In the current ecosystem of discrete graphics cards, graphics DRAM buyers such as Nvidia are still opting for a business model based on bundle sales (that is, graphics card manufacturers that purchase Nvidia GPUs must also purchase graphics DRAM from Nvidia). Given that Nvidia and AMD have cornered the vast majority of graphics DRAM supply, notebook OEMs and small- and medium-sized manufacturers of computer components (such as motherboards) will find it difficult to procure sufficient graphics DRAM, while DRAM suppliers’ fulfillment rate for graphics DRAM chips remains relatively low. These aforementioned factors are responsible for not only the nearly 15% QoQ hike in the overall contract prices of graphics DRAM for 3Q21 (which is slightly higher than the corresponding price hikes in mainstream PC and server DRAM products for 3Q21), but also why spot prices of GDDR6 chips are about 10-15% higher than contract prices.

On the whole, prices in the graphics DRAM spot market, which is an extremely responsive market, have already begun to reflect the weakening demand from the end-product segment, particularly for graphics cards used in cryptocurrency mining. As the supply of second-hand graphics card increases, some graphics card manufacturers may thus kick off promotional price cuts to boost sales. In addition, buyers in the spot market may also begin anticipating even lower prices, and this anticipation will likely either lead to a massive decline in their graphics card demand or result in these buyers adopting a speculative attitude regarding graphics DRAM. TrendForce therefore believes that the gap between spot prices and contract prices of GDDR6 chips will begin to narrow in 3Q21.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

As third quarters have typically been peak seasons for the production of various end-products, the sufficiency ratio of DRAM is expected to undergo a further decrease in 3Q21, according to TrendForce’s latest investigations. However, DRAM buyers are now carrying a relatively high DRAM inventory due to their amplified purchases of electronic components in 1H21. The QoQ increase in DRAM contract prices are hence expected to slightly narrow from 18-23% in 2Q21 to 3-8% in 3Q21. Looking ahead to 4Q21, TrendForce believes that DRAM supply will continue to rise, thereby leading to either a further narrowing of price hikes or pressure constraining the potential price hike of DRAM products.

PC DRAM prices are expected to rise by 3-8% QoQ due to continued constraints on production capacities

From the perspective of demand, the stay-at-home economy has resulted in persistently high demand for notebook computers. Although discrepancies still exist among notebook brands’ inventory levels of various components, these brands are still making an aggressive attempt at maximizing their production of notebooks. However, as most of these brands are still carrying about 8-10 weeks’ worth of PC DRAM inventory (which is relatively high), PC DRAM purchasing strategies from the buyers’ side will therefore remain relatively conservative. From the perspective of supply, due to the rising demand for server DRAM, the production capacity allocated to PC DRAM is still in a severe supply crunch. Hence, DRAM suppliers are firm in their attitudes to raise PC DRAM quotes, and TrendForce expects the price negotiations between PC DRAM buyers and suppliers in 3Q21 to become both lengthier and more difficult as a result, with contract prices likely finalized at the end of July. Even so, what is now certain is that both sides have reached some level of understanding regarding the ongoing price hike of PC DRAM products. TrendForce forecasts a 3-8% increase in PC DRAM contract prices for 3Q21.

QoQ increase in server DRAM prices for 3Q21 are expected to narrow to 5-10% due to buyers carrying a relatively high inventory

With regards to demand, in spite of the minor increase in the shipment of whole servers, server DRAM buyers are less aggressive in their server DRAM procurement compared to the previous quarter. For instance, CSPs in North America and in China are currently carrying more than eight weeks of server DRAM inventory. In other words, procurement activities for server DRAM will gradually decline in the coming quarters in accordance with market demand. Notably, some Tier 2 clients will continue to procure server DRAM in 3Q21 since they did not sufficiently stock up in the prior quarters, and this demand will likely result in upward momentum for server DRAM prices. With regards to supply, the three major DRAM suppliers (Samsung, SK Hynix, and Micron) are limited by the fact they are currently carrying a relatively low inventory of server DRAM. As such, these suppliers will attempt to maintain their profitability by increasing prices each quarter. It should also be pointed out that the decreased DRAM demand from smartphone brands has in fact allowed more wiggle room for server manufacturers to negotiate for more favorable server DRAM prices. TrendForce thus believes that, before the supply side and demand side can reach an agreement, negotiations for server DRAM prices will become increasingly lengthy, and that server DRAM contract prices for 3Q21 will likely increase by 5-10% QoQ once negotiations are finalized.

Mobile DRAM prices are expected to defy market realities and increase by 5-15% QoQ, with potential risks of high price and low demand

In terms of demand, certain smartphone brands are now carrying a relatively higher inventory of mobile DRAM owing to Southeast Asia’s worsening COVID-19 pandemic, which led smartphone brands that primarily manufacture and sell their products there to begin lowering their production targets in 2Q21. In addition, some smartphone brands have set overly ambitious production targets; combined with the current shortage of foundry capacities, the discrepancies among the supply of smartphone components have now become more apparent, in turn forcing brands to slow down their mobile DRAM procurement in order to adjust their component inventories first. Demand has remained strong from clients in the smartphone market since 4Q21, so the supply fulfillment rate of the three major DRAM suppliers for their smartphone clients will be consistently higher compared to clients in other markets. As DRAM demand from non-smartphone applications ramps up and results in higher profitability than mobile DRAM, the three major DRAM suppliers will continue to adjust their production capacities in accordance with the shifting supply and demand from various segments, thus resulting in an increasingly constrained supply of mobile DRAM.

It should be pointed out that DRAM market leader Samsung has generally tried to minimize the profit discrepancies among its various products. Furthermore, the price hike in Samsung’s mobile DRAM products was relatively lower compared to Micron in 1H21. As a result, in view of the weakening mobile DRAM demand in 3Q21, Samsung will increase its mobile DRAM prices to a more notable extent compared to its US competitors. Going forward, Samsung’s price hike will lead its competitors to retool their pricing strategies, subsequently leading to an even wider price increase across the entire mobile DRAM market. As such, TrendForce expects mobile DRAM prices to increase by 5-15% QoQ in 3Q21, which is a step up compared to 2Q21. On the other hand, this price hike against market realities may potentially lead to a further decline in mobile DRAM demand, resulting in a situation with high price and low demand.

Graphics DRAM prices are expected to increase by 8-13% QoQ due to tight supply of GDDR6

Regarding graphics DRAM demand, many cryptocurrency miners were previously intent on mining ETH with older graphics cards as it reached peak prices. Nevertheless, the recent bearish turn of the cryptocurrency market has indirectly had an impact on demand for graphics cards equipped with GDDR5, although most of this impact primarily affected the spot market. For the contract market, more than 90% of graphics DRAM applications have migrated to GDDR6 products, which are now in short supply since new graphics cards are equipped with GDDR6 memory and are in high demand. In addition, the vast majority of GDDR6 stock from DRAM suppliers is currently cornered by graphics card manufacturers and game console manufacturers, thereby further limiting the graphics DRAM supply available to small and medium OEMs/ODMs. Regarding graphics DRAM supply, although GDDR6 accounts for more than 90% of the three major DRAM suppliers’ graphics DRAM production, demand for GDDR6 still far exceeds supply because end product demand has also migrated to GDDR6. As orders for server DRAM gradually ramp up in 3Q21, DRAM suppliers will prioritize fulfilling demand from the server market first. Hence, graphics DRAM contract prices for 3Q21 are expected to increase by 8-13% QoQ.

Consumer DRAM prices are expected to increase by up to 13% QoQ in light of strong demand

At the moment, consumer DRAM demand is relatively robust from the consumer electronics market and the telecom market. In addition, as China has been accelerating its build-out of 5G infrastructures and its rollout of WiFi 6 in the post-pandemic era, the overall demand for consumer DRAM remains strong going forward. On the other hand, the three dominant DRAM suppliers are slowing down their transition of production capacities from DDR3 products to CMOS Image Sensors or other Logic IC products now that the consumer DRAM market has taken a bullish turn. However, in the medium-to-long term, the general trend in the DRAM industry will still point to the elimination of the older 25/20nm process technologies and the continued migration towards more advanced 1Znm and 1αnm processes. As a result, given DDR3 products’ declining supply and strong demand, DDR3 prices for 3Q21 are expected to increase by 8-13% QoQ, while DDR4 prices are expected to undergo a minor growth of 3-8% QoQ in accordance with mainstream PC and server DRAM prices.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

TrendForce’s latest investigations find considerable discrepancy between prices for graphics DRAM products in the contract market and in the spot market. Quotes for graphics DRAM products continue to rise in the contract market as the severe undersupply situation persists. Furthermore, the supply fulfillment rates for orders from some medium- and small-size clients have been hovering around 30%. This undersupply situation is expected to persist through 3Q21, during which graphics DRAM contract prices are expected to rise by 8-13% QoQ. Regarding the spot market, on the other hand, the value of ETH experienced continued uptrend from the start of 2021 until May, thereby driving up the demand for graphics cards, regardless of them belonging to the newer or older series. At the height of the graphics card boom, spot prices of graphics DRAM products were up to 200% higher than contract prices. Demand from miners for graphics cards are expected to be relatively muted before cryptocurrencies return to their previous bullish trends, and the gap between the spot and contract prices of graphics DRAM products will likely narrow in 3Q21 as a result.

TrendForce expects four key factors to continue driving up graphics DRAM prices in the contract market. First of all, demand in the PC market remains high, particularly for gaming products. Secondly, DRAM suppliers’ production capacities allocated to most clients are constrained by the fact that Nvidia bundles its GPUs with graphics DRAM, meaning DRAM suppliers have prioritized capacity allocation to Nvidia as opposed to smaller clients. Thirdly, both the Xbox Series X and PS5 are equipped with GDDR6 16Gb chips, which is different from GDDR6 8Gb chips. As the two chips are non-interchangeable, once DRAM suppliers commit their production capacities for one, they can no longer produce the other using the same batch of wafers. Finally, since there has been a resurgence of server DRAM orders, DRAM suppliers are still prioritizing the production of these products as they are a mainstream market product. As various products each compete over limited DRAM production capacities, graphics DRAM contract prices are expected to undergo an increase going forward. In particular, medium- and small-size OEMs/ODMs may likely face double-digit percentages increases.

Sharp drop in values of cryptocurrencies has caused spot prices of GDDR5 and GDDR6 products to fall

Regarding the spot market, although spot prices for GDDR6 products has been undergoing a slight drop since May, they are still nearly 100% higher than the average contract prices. Conversely, there is almost no difference between spot and contract prices for GDDR5 products. Looking at the reasons behind the slide in spot prices of graphics DRAM products, a sharp drop in the values of cryptocurrencies is the most significant contributor apart from the excessively large difference between spot and contract prices. The recent bearish movement of cryptocurrencies has resulted in a sharp drop in incentives for miners. In turn, this has led to a corresponding drop for older graphics (such as the Nvidia GTX 1660, which features GDDR5 DRAM), which have no other sources of demand. GDDR5 prices hence entered a significant decline. With regards to newer graphics cards, however, there is still a baseline level of demand for them thanks to purchases by gamers. Furthermore, these newer graphics cards, much like the new generation of game consoles, feature GDDR6 DRAM. Therefore, due to the current demand for GDDR6 products, their price drop in the spot market is lower compared to GDDR5 products.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com