PC Market Surpasses Expectations in 2Q14, DRAM Industry to Improve under Upcoming Peak Quarters

The DRAM market’s transactions have become sluggish starting from 2014, according to DRAMeXchange, memory and storage research division of TrendForce. The spot market vendors and module suppliers' relatively low inventories, DRAM manufacturers' gradual transition from PC DRAM to Mobile DRAM, and market shortages are all key factors affecting the spot market price movements. DDR3 4Gb chip prices rose 7.9% from US$ 3.67 on April 14th, 2014, to US$ 3.96 on May 2nd, 2014. With soaring spot market prices, the entire contract price movements became relatively stable during 2H'April, and average contract prices remaining unchanged at around US$ 30.5.

Looking at the industry movements, in 2013 Samsung started to place the majority of its focus on producing Mobile DRAM, and targeted its PC DRAM products mainly towards the PC OEM clients. SK Hynix, meanwhile, made similar efforts to raise Mobile DRAM output while lowering its entire PC DRAM production. Moreover, Micron's Singapore plant is making a full transition towards NAND Flash products, whereas its Taiwanese subsidiary, Rexchip, recently took steps to increase its Mobile DRAM production. With future contract prices unlikely to drop easily following the major DRAM manufacturers' output adjustments, DRAM prices in general have a chance of being maintained at approximately US$ 30 during 2H'14.

With regard to the PC market, Notebook shipments are currently performing better than expected due to the official termination of Windows XP support and Microsoft's promise to subsidize XP users switching to new computers. By the end of the second quarter, worldwide Notebook shipments are anticipated to grow 3.4% QoQ, whereas shipments of the eight largest branded PC-OEMs are expected to rise by as high as 7.3%. In the coming periods, many PC OEMs will continue to look for new areas to expand in as opportunities arise in the PC markets; Samsung and Acer, for instance, are already making notable efforts to release Chromebooks, touting low cost and cloud based features, which are intended for the business and education industries. As the interest in these devices begins creating additional demand outside of the typical Notebook market, the overall DRAM industry can be expected to face another potential shortage in the future.

The typically intense price competitions in the DRAM market will no longer emerge as the industry structure develop into an oligopoly. Despite standard PC DRAM being the most profitable DRAM product in the industry, Mobile DRAM and Server DRAM are expected to undergo shipment and profit-related improvements under strong market demands. The DRAM market is projected to carry on last year’s high growth trends, and create another wave of total market value milestone.