DRAM Spot Market
Regarding recent developments in the spot market, there have been sporadic price upticks for low-priced DDR4 products. Meanwhile, prices of DDR5 products have kept falling due to the plentiful chip supply. Unlike the contract market, the spot market has been relatively unaffected by discussions about the possibility of price hikes, and spot trading as a whole is rather tepid. Furthermore, module houses were previously quite aggressive in stocking up, so they are now eager to sell as their inventories remain at a fairly high level. The average spot price of the mainstream chips (i.e., DDR4 1Gx8 2666MT/s) dropped by 0.13% from US$1.517 last week to US$1.515 this week.

NAND Flash Spot Market
Spot market demand, different from that of the contract market, remains relatively sluggish recently, where concluded prices are still dropping due to sufficient stocks, despite a slight increment in price inquiries. 512Gb TLC wafer spots have dropped by 0.28% this week, arriving at US$1.413.

YMTC has officially notified a 3~5% price increase for NAND Flash in mid-May. However, the initial impact of the price hike is expected to be felt in the enterprise market, and it may take some time to reflect in the consumer spot market.

The semiconductor industry is in the midst of a correction period aimed at tackling inventory challenges, and the memory sector is feeling the impact. Major players in global memory manufacturing, including Samsung, SK Hynix, Micron, and YMTC, have recently disclosed substantial cuts in CAPEX, ranging from 45~50% starting from 4Q22. The most recent financial reports from Micron and Samsung further underscore the industry’s downward trend.

TrendForce highlights that YMTC’s decision to raise prices comes amidst market conditions marked by substantial oversupply in the second quarter. Despite Samsung’s efforts to curtail production, the positive effects of this reduction are not anticipated to materialize until the latter part of the year. Consequently, experts predict a more substantial decline in contract prices for the second quarter of 2023 than initially expected.

The market situation in 2Q23 is still oversupplied, leading to further price declines. Since October of last year, the market transaction price for wafers has been lower than the supplier’s cash cost due to selling pressure. Some suppliers used the opportunity when Samsung announced production cuts to raise the wafer price, which is likely why YMTC made this announcement. TrendForce predicts that as demand gradually recovers in the second half of the year, wafer prices will become more resilient. (Photo credit: YMTC LinkedIn)

TrendForce’s latest research indicates that, as production cuts to DRAM and NAND Flash have not kept pace with weakening demand, the ASP of some products is expected to decline further in 2Q23. DRAM prices are projected to fall 13~18%; NAND Flash is expected to fall between 8~13%.

On the other hand, based on the weekly updates on the DRAM and NAND flash spot markets by TrendForce, the spot markets for DRAM and NAND flash continued to decline this week. Details are as follows.

DRAM Spot Market

Spot prices of DDR4 products have been dropping incrementally for several consecutive days, and buyers in the spot market are mostly waiting for further developments. However, there are more quote inquiries for DDR5 products because the supply gap hasn’t been bridged. As a result, there is now an uptick in spot prices of DDR5 products, and the divergence between DDR4 and DDR5 products in terms of price trajectory is expected to continue for several weeks. Nevertheless, spot prices of DDR4 products are showing no sign of rebounding in the near future. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) fell by 0.74% from US$ 1.618 last week to US$ 1.606 this week.

NAND Flash Spot Market

European and American spot markets have yet to recover in purchase sentiment, while some Asian markets, due to the recuperation of the Chinese market, have slightly risen in purchase willingness. Overall spots have not experienced any apparent fluctuations from South Korean suppliers’ announcement of production cuts, despite sellers aggressively adjusting their prices and pursuing orders, which led to a restricted level of overall transactions and a small drop in prices. 512Gb TLC wafer has dropped by 0.35% in spot prices this week, arriving at US$1.431.

DRAM Spot Market:

SpecTek, a subsidiary of Micron, has slightly increased the prices of its products in the spot market. Additionally, sellers have indicated that they will not slash prices further for low-priced chips. As a result, the momentum of trading activities has stagnated. Like buyers in the contract market, buyers in the spot market are adopting a wait-and-see approach. Facing significant losses, DRAM suppliers need to enlarge the scale of their production cuts in order to stabilize prices. DDR4 products are also experiencing a serious inventory glut, and their prices could keep going down due to the weak overall demand. Conversely, DDR5 products are experiencing a tighter supply due to the PMIC incompatibility issue, thereby leading to an increase in their prices. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) fell by 0.06% from US$3.235 the previous week to US$3.233 this week.

NAND Flash Spot Market: 

Inquiries for some packaged dies were once prosperous with market anticipation gradually turning to focusing on the rebound of prices under suppliers’ production cuts, however, the level of demand is seen primarily from short-term and urgent orders at an insignificant expansion of transactions, where overall prices are still dropping at a decelerated pace. 512Gb TLC wafer has dropped by 0.76% in spot prices this week, arriving at US$1.436.

Amid a prolonged market downturn and persistent weakness in end demand, the world’s top three memory chipmakers – Samsung, SK Hynix, and Micron – have implemented production cuts in an effort to control the continuing decline in memory prices through supply management. Recently, news emerged in the memory channel market that Micron had notified its customers that starting in May, it will not accept inquiries for DRAM and NAND Flash below current market prices.

According to TrendForce, the situation is not widespread at the moment, but is limited to low-priced memory chips. As for other product categories with high inventory levels, they still cannot avoid the situation of falling prices.

Contract market:

Although DRAM suppliers have actively reduced production, the output bit volume has not yet reached an effective convergence in 2Q23, so the quarterly contract price decline will be greater than originally expected, with an expected drop of more than 15%. TrendForce has observed that there is a strong wait-and-see atmosphere on the OEM side. While the willingness to purchase DRAM has increased, the premise of the deal is that low-priced quotes are attractive enough to OEMs. Due to poor demand prospects, the purchasing behavior of buyers still appears to be passive.

Spot market:

TrendForce pointed out that Micron’s subsidiary brand, Spectek, has slightly raised prices for its products this week, especially in the low-priced chip segment, indicating a reluctance to further reduce prices. Therefore, trading in the spot market appears stagnant, similar to the strong wait-and-see attitude mentioned in the contract market.

As suppliers have already entered a stage of significant losses, it is necessary to continue to expand production cuts to avoid prices from collapsing again. Among them, DDR4 still has a price decline due to high inventory levels and weak demand, while the supply of DDR5 is limited by the PMIC compatibility issue, resulting in an upward trend in spot prices.