Amid D-RAM Market Slump, Eyes on 'DDR5'... But Concerns Over Price Decline (Comprehensive)

D-RAM Market Peaked in May, Decline Expected Until Early Next Year
TrendForce Forecasts Up to 18% Price Drop in Q4
Semiconductor Industry Hopes High-Value 'DDR5' D-RAM as Solution
Fast Price Decline of DDR5 Also Draws Cautious Views

Samsung Electronics DDR5 image / Source=Samsung Electronics

[Asia Economy Reporter Kim Pyeonghwa] As the global DRAM market is expected to continue its downward trend until next year, the next-generation DRAM technology 'Double Data Rate (DDR)5' is gaining attention as a solution. There is anticipation that the commercialization of high value-added DDR5 DRAM could increase industry profits. However, concerns are also emerging as DDR5 prices are reportedly falling rapidly.

The Upward Trend in the DRAM Market Until May This Year Comes to an End

According to the semiconductor industry on the 23rd, the global DRAM market peaked in May and has been declining since. Market research firm IC Insights recently reported that global DRAM sales volume in July decreased by 21% compared to the previous month. After showing a 39% month-on-month increase until May, the market experienced a 36% negative growth in June, marking two consecutive months of decline.

IC Insights evaluated that the upward trend in the DRAM market, which began in the second half of 2020 and continued until May this year, has come to an end. They explained that this result was due to a sharp drop in demand from front-end industries such as smartphones and PCs amid global economic recession and expanding inflation. They also forecast that the DRAM market will decline by 38% in the third quarter compared to the same period last year, with this situation continuing into early next year.

DRAM price declines are ongoing. According to the Ministry of Trade, Industry and Energy, the fixed transaction price of DRAM dropped from $3.41 in the first quarter to $3.37 in the second quarter. It is expected to decrease further from $2.88 in the third quarter to $2.50 in the fourth quarter. Market research firm TrendForce predicted that DRAM prices could fall by up to 15% and 18% in the third and fourth quarters, respectively, compared to the previous quarter.

These forecasts add to concerns in the domestic semiconductor industry, which is centered on memory semiconductors. This is especially a worrying factor for Samsung Electronics and SK Hynix, which account for over 70% of the global DRAM market. According to TrendForce, Samsung Electronics (43.5%) ranked first and SK Hynix (27.4%) second in global DRAM market sales in the second quarter. DRAM accounts for 50% and 90% of total sales in Samsung Electronics' semiconductor division and SK Hynix, respectively.

DDR5 Seen as a Solution to Market Slump... "It May Be Difficult for Semiconductors Alone to Reverse Amid Economic Recession"

The domestic semiconductor industry views DDR5 as one of the solutions to overcome the sluggish DRAM market. DDR5 is the latest DRAM standard following DDR4, which was released in 2013. It offers more than twice the speed of DDR4 and 30% higher power efficiency. It is evaluated as suitable not only for mobile and PC but also for servers requiring high-performance products.

Market research firm Omdia predicts that the share of DDR5 DRAM in total DRAM shipments will increase from 4.7% this year to 40.5% in 2025. The semiconductor industry expects the market to open up in earnest once Intel, AMD, and others release server CPUs supporting DDR5. Although Intel, a leader in server CPUs, has postponed related product launches several times since last year, the industry expects to see them between the end of this year and early next year. To this end, all major DRAM market players, including Samsung Electronics, SK Hynix, and Micron, have completed preparations for mass production of DDR5 DRAM.

Since DDR5 DRAM is about 30% more profitable than DDR4, industry profits are expected to increase, but rapid price declines remain a variable. Taiwanese media Digitimes Asia recently reported that DDR5 DRAM prices could fall significantly this year and continue to decline into next year. According to TrendForce, the decline in DDR5 DRAM prices compared to DDR4 may be more pronounced in the third and fourth quarters. For PC DRAM, DDR4-based prices could fall by up to 18% quarter-on-quarter in the third quarter, while DDR5-based prices could drop by up to 20%. Especially in server DRAM, which the industry focuses on, DDR4-based prices may fall by up to 18% in the fourth quarter compared to the previous quarter, while DDR5 (sample) prices could decrease by up to 30%.

While price declines could stimulate market demand, the rapid price drops influenced by external factors such as economic slowdown cannot be viewed positively alone. Kim Yangpaeng, a senior researcher at the Korea Institute for Industrial Economics & Trade, said, "Although DDR5 is proposed as a solution in a sluggish market, the reversal effect may not be significant. Since the global economy is frozen due to economic slowdown, the semiconductor sector alone may have limited room to reverse until the world economy improves."

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