DRAM Spot Prices Rise for the First Time in a Year Amid Samsung Production Cuts... Industry Recovery Optimism Increases

After Samsung Electronics announced production cuts, D-RAM spot prices rose for the first time in about 400 days. Although it cannot yet be confirmed as a signal indicating a full-scale market recovery, it is being evaluated as a factor that could raise expectations for an industry improvement in the second half of the year.

On the 13th, market research firm DRAMeXchange reported that the spot price of 'Double Data Rate (DDR)4 16 Gigabit (Gb) (2Gx8) 2666' D-RAM, which closed the previous day, was $3.235. After rising 0.78% compared to the previous day on the 11th, the price remained steady. This is the first time in 1 year and 1 month since March 7 last year ($7.873) that the spot price of this product has increased.

Spot prices are transactions conducted mainly with actual demand customers through distributors. While the industry mainly monitors contract prices between companies (fixed transaction prices), the trend in spot prices can be seen as a leading indicator to gauge market conditions, as it is reflected in fixed transaction prices.

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DRAMeXchange stated that when examining the spot price of the PC general-purpose product DDR4 16Gb (2Gx8) 2666, it referred to transactions of Samsung Electronics and SK Hynix products. DRAMeXchange updates spot price statistics for various D-RAM products three times daily.

The industry places significance on the rise in D-RAM prices, which had been declining continuously as the semiconductor market downturn intensified last year. Some view this as an effect of Samsung Electronics' production cuts. Although it usually takes more than three months for the impact of production cuts to appear in the market, the announcement of production cuts by the industry leader itself is said to have a significant impact on the market by stimulating buyer sentiment.

According to statistics from market research firm TrendForce, the D-RAM market share in the fourth quarter of last year was ▲Samsung Electronics (45.1%) ▲SK Hynix (27.7%) ▲Micron (23.0%) ▲Nanya (2.1%) in that order. Samsung Electronics expanded its market position by increasing its share by 4.4 percentage points compared to the previous quarter.

Earlier, on the 7th, Samsung Electronics released explanatory materials on the day of its preliminary earnings announcement, stating that it is "adjusting memory production downward." It officially confirmed artificial production cuts by controlling wafer input to reduce chip production. It is known that production is being reduced mainly for DDR4 D-RAM that has exceeded a certain level of inventory.

Of course, it remains to be seen whether this rise in spot prices is a full-fledged signal indicating market changes. The market expects the effects of production cuts in the memory industry to appear in earnest in the second half of the year. Song Myung-seop, a researcher at Hi Investment & Securities, said, "If customers' inventory sufficiently decreases after the third quarter and semiconductor demand recovers from the fourth quarter, the semiconductor industry is expected to enter a recovery phase supported by a low production growth rate."

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