Despite Denials, D-RAM Peak Price Theory Gains Momentum... DXI Index Hits Lowest in Six Months

[Asia Economy Reporter Jeong Hyunjin] The spot trading prices of D-RAM, led by domestic semiconductor companies such as Samsung Electronics and SK Hynix, continue to decline. Despite the 'peak theory' that emerged last month, prices have steadily fallen, with spot trading prices for PC D-RAM now below the fixed contract prices agreed upon with companies. Although semiconductor companies have dismissed these concerns as 'excessive worry,' the peak theory raised in the market appears to be gaining traction.

According to market research firm DRAMeXchange on the 1st, the DXI index, which indicates the price outlook for D-RAM, recorded 34,904.57 on the 31st of last month, marking the lowest level in six months since March 1 (34,436.33). The DXI index rose above the 30,000 mark on February 22 due to expanding memory demand and fluctuated between 36,000 and 38,000 for about four months starting in March. After reaching 38,755.14 on July 14, the DXI index has since shown a rapid decline and has now fallen below the 35,000 level.

(Data source = DRAMeXchange)

This rapid drop in the index is interpreted as a result of the recent decline in D-RAM spot trading prices. The spot price of DDR4 8Gb (1G*8) 2666Mbps, a representative PC D-RAM, has fallen into the $3 range for the first time in seven months since February. The average spot price of this product was $3.864 on the 31st of last month, the lowest since January 27. After maintaining the $4 level since February, the spot price dropped to the $3 level on the 26th of last month and has continued to decline for five consecutive trading days.

Notably, the spot trading price is now below the fixed contract price. Although spot trading prices are temporary transactions conducted through distributors and differ from fixed contract prices determined by long-term agreements directly with companies, the industry generally views spot prices as a leading indicator of the fixed contract prices since they reflect real-time market conditions for D-RAM, which is traded quarterly. Currently, the average fixed contract price for PC D-RAM DDR4 8Gb is $4.10, showing a stable trend for two consecutive months since July. Considering this, the spot trading price has been below the fixed contract price since the 20th of last month.

Not only PC D-RAM but also the server market, which was expected to lead the memory market in the second half of the year, is showing a less optimistic trend than industry expectations. Market research firm TrendForce forecasted in a report released the day before that server D-RAM prices will decline in the fourth quarter. TrendForce stated, "As clients' server D-RAM inventory levels have increased, demand has turned conservative," and predicted, "It will be difficult to raise prices further in the fourth quarter, and prices may even fall by 0 to 5%."

As D-RAM prices continue to decline, the peak theory is gaining support in the market. Following TrendForce's early last month forecast of falling PC D-RAM prices, analysts have also predicted that prices may peak this year and then decline. Doh Hyunwoo, an analyst at NH Investment & Securities, said in a recent report, "Currently, the D-RAM inventory held by PC and server companies is above normal levels," adding, "D-RAM prices formed a peak in the third quarter and the upward trend is expected to slow from the fourth quarter."

However, the semiconductor industry counters these concerns as 'excessive.' They explain that server demand remains high, demand for electronic devices persists due to remote work caused by COVID-19, and the expansion of memory semiconductor applications will maintain high D-RAM demand. The industry also expects that while there may be temporary price adjustments due to semiconductor supply and demand factors, the downward trend will not be prolonged.

This content was produced with the assistance of AI translation services.