DRAM Spot Prices Rebounded... Why Is a 8-13% Decline Expected in Q1 Next Year?

[Asia Economy Reporter Jeong Hyunjin] The average selling price of DRAM in the first quarter of next year is expected to fall by 8-13% compared to the fourth quarter of this year. Although there has been growing optimism that prices might have bottomed out and are rising due to the recent increase in spot prices of PC DRAM, the overall DRAM prices are projected to decline further in the first quarter of next year as server DRAM inventories increase and demand decreases.

On the 14th, Taiwanese market research firm TrendForce forecasted that the overall average selling price of DRAM in the fourth quarter of this year will drop by 3-8% quarter-on-quarter, and fall by 8-13% in the first quarter of next year. TrendForce stated, "Although the inventory levels of PC OEMs have decreased over the past few months, overall DRAM demand is expected to enter a downward cycle in the first quarter of next year, leading prices to follow a downward trajectory."

This forecast came amid growing expectations of market improvement following the rebound in DRAM spot prices. The spot prices of PC DRAM, which can be used as a leading indicator of the DRAM market conditions, have been rising since the end of last month, suggesting that the market downturn seen in the second half of this year might improve sooner than expected. However, since PC DRAM accounts for only about 20% of the DRAM market, price movements are also influenced by inventory conditions in other application sectors.

In fact, the larger decline forecasted by TrendForce for the first quarter of next year compared to the fourth quarter of this year is largely attributed to server DRAM. The average selling price of server DRAM is expected to fall by 8-13% quarter-on-quarter in the first quarter of next year, significantly exceeding the 3-8% decline seen in the fourth quarter of this year. For PC DRAM, based on DDR4, the decline is expected to be 5-10% quarter-on-quarter for both the fourth quarter of this year and the first quarter of next year. TrendForce also anticipates a slight decrease in demand for server DRAM.

Mobile DRAM is also expected to decline by 8-13%. Consumer DRAM, mainly used in TVs and other home appliances, is forecasted to experience a downward trend. DRAM for graphics cards is predicted to maintain its current level.

In the market, there are simultaneous expectations that prices will fall until the first quarter of next year and then turn upward, as well as forecasts that the downturn will be prolonged. TrendForce stated, "Overall DRAM demand will enter a cyclical decline in the first quarter of next year, and DRAM prices will continue to trend downward," adding, "Whether the downward trend will stabilize depends on the inventory management capabilities of suppliers and the price outlook of demand-side companies."

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