D-RAM Spot Prices Rebound... Growing Impact of Semiconductor Production Cuts in the Second Half of the Year

Due to the production cuts by memory semiconductor companies such as Samsung Electronics and SK Hynix, there are forecasts that the decline in the average selling price (ASP) of DRAM in the third quarter will slow down, while some DRAM spot prices have begun to rebound significantly from this month. Samsung Electronics officially announced production cuts along with its first-quarter earnings report in April. Industry insiders expected the effects to appear 3 to 6 months after the production cuts. Changes in semiconductor prices are being detected three months after Samsung Electronics joined the production cuts.

On the 19th, the spot price of DDR4 16Gb (1G*16) DRAM, compiled by Taiwanese market research firm DRAMeXchange, was $2.950 as of the morning, approaching $3. The price had fallen to $2.903 on the 6th but reversed to an upward trend from that day, rising to $2.962 on the 17th. There were significantly more days with price increases than decreases, with the increase exceeding 2%. DDR4 16Gb was traded at $3.824 in early January but experienced a continuous price decline, breaking below the $3 range in May.

DDR4 16Gb is not the main DRAM product line produced by memory semiconductor companies. Due to its large capacity, it is mainly used in high-end PCs and other expensive electronic products rather than general-purpose devices. However, the industry views the rise in spot prices of DDR4 16Gb products as the beginning of the effect of semiconductor production cuts. Since the production cuts by memory semiconductor companies are focused on legacy (old process) product lines rather than cutting-edge ones, it is highly likely that the effects will first appear in consumer-oriented products rather than enterprise-oriented ones. Given that the rebound of DDR4 16Gb products has started, there are also expectations that the rebound in spot prices will spread to other DRAM products.

In fact, in the semiconductor market, there are talks that the DRAM supply shortage caused by production cuts from memory semiconductor companies will begin in the third quarter of this year and continue throughout next year.

Market research firm TrendForce predicted that unlike the first and second quarters of this year, when supply exceeded demand for DRAM, demand will surpass supply in the third and fourth quarters, resulting in an overall DRAM supply shortage rate of 1.19% for this year. They forecast that if the DRAM supply growth rate is -2.03%, the demand growth rate will exceed 7%.

For next year, they diagnosed that with a supply growth rate of 10.90% and a demand growth rate of 12.98%, the overall DRAM supply shortage rate could reach 3.01%. Han Dong-hee, an analyst at SK Securities, explained, "With the acceleration of production cuts by suppliers in the second half of the year, it is reasonable to expect the spread of spot price rebounds to other products. Considering the suppliers’ profitability-seeking strategies, it will be difficult for supply to exceed demand from the third quarter, and due to reduced capital investment caused by the accelerated transition to DDR5 this year, the capacity to respond to supply in 2024 will also be limited."

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