Stagnant PC DRAM Contract Prices in August; TrendForce Anticipates Sliding Prices for 4Q18 Contracts

DRAMeXchange, a division of TrendForce, reports that most 3Q18 contracts in the PC DRAM market were completed in July. With contracts being mainly quarterly deals, the agreed prices for 3Q18 are generally slightly higher than those for 2Q18. Therefore, the overall trajectory of contract prices in the PC DRAM market has been relatively stable in August and is expected to remain so in September. The average contract price of mainstream 4GB PC DRAM modules has stayed at US$34.5 in August, while the average contract price of 8GB PC DRAM modules has also stayed at US$68. DRAMeXchange maintains its forecast that the average QoQ price increase for PC DRAM products in 3Q18 will be around 2%.

The spot market, where developments are an early indicator of the contract price trend, shows that prices of mainstream chips have kept falling in August, and their general difference with contract prices continues to widen, says Avril Wu, senior research director of DRAMeXchange. Currently, DRAM suppliers are heading into negotiations with their clients to arrange the contracts for 4Q18. However, they will have more difficulties in maintaining their prices going forward. After examining the latest changes in bit supply and demand, DRAMeXchange anticipates sliding prices for 4Q18 contracts.

In anticipation of falling ASPs during 2019, clients for now are reluctant to stock up

Although 3Q18 is part of the traditional busy season, the demand growths of various end products are limited and not up to their usual seasonal levels. For instance, some smartphone brands and a few server manufacturers have marked down their shipment projections. Although end-product manufacturers as a whole are seeing a gradual drop in their DRAM inventories after posting shipment growths in this year’s first half, they are also noticing that the supply situation in the DRAM market is shifting from tight to loose. At the same time, most end-product manufacturers are highly uncertain about their own demand situations in 2H18 and the later period. As the DRAM supply expands, clients in the end market are actually hesitant to stock up and if the prices of DRAM products are likely to go down. If so, there is no urgency to replenish the DRAM inventory despite the seasonal influence.

In the case of the server DRAM market, where demand has been fairly strong, impasse on prices is now appearing in the latest rounds of contract negotiations. This is an indication that DRAM suppliers may have to lower prices to maintain or increase sales volumes for their fourth-quarter deals. Also, there are now more discounts on high-density memory modules (high-density here is defined as 8GB or above for PC DRAM modules and 32GB or above for server DRAM modules). On the whole, suppliers are showing greater flexibility in their pricing strategies because they want to lock in the shipment volumes going into 2019 and capture more market share.