TrendForce: DRAM Prices to Undergo Continuous Reduction Due to Weakening End Demand and Increased Supplies

Prices for DRAM components grew steadily started in the beginning of second quarter due to the absence of capacity expansions in the industry, the growing obstacles faced by suppliers transitioning towards 2xnm manufacturing technology, and the anticipation towards the impending peak quarters. The DDR3 1600 MHz 4Gb prices climbed to as high as US$ 4.6 during July 18th, 2014. The spot market showed numerous signs of growth in the recent periods, with average DDR3 4Gb spot prices ending at US$ 4.35 on July 31st, according to DRAMeXchange, the memory and storage research division of TrendForce. This is approximately 18% higher than the average DDR3 4Gb contract price for 2H’July, which is approximately US$ 3.69. 

In the recent periods, the industry has faced a number of challenges and uncertainties despite the impressive demands in the spot market. Some of the factors leading to this situation include the reduced Notebook shipments experienced by some PC OEMs during the beginning of July and the gradually weakening demand momentum in China's smartphone market. Even with the new iPhone's shipments expected to hit record levels during the upcoming periods, the content-per-box for the device's LPDDR3 component is still only 1GB. As such, there is unlikely to be any major improvements in the industry's overall bit demand. The DDR3 1600 MHz 4Gb prices experienced a negative turnaround starting from July 25th, and gradually dropped from US$ 4.425 in average down to US$ 4.199 on August 15th. DRAMeXchange's Assistant Vice President, Avril Wu, believes that the price difference between the market's spot and contract prices will gradually shrink following the pricing adjustments implemented by the DRAM suppliers. With the industry's end demand expected to weaken and Samsung preparing to mass produce DRAM products using its 25nm process in the fourth quarter, the chances of DRAM prices undergoing further reductions have become significantly greater.