Report: DRAM and NAND prices to fall by 10 percent in Q4

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Samsung just shipped the first batch of DRAM produced with EUV technology.
Image: Samsung

Market analysts anticipate DRAM and NAND prices will decline by at least 10 percent sequentially in the fourth quarter. TrendForce believes the segment will be negatively affected by coronavirus pandemic related stockpiling that occurred earlier this year.

DigiTimes’ research supports that outlook and indicates memory prices will continue to fall for the first half of 2021.

How the Coronavirus Pandemic Precipitated a Decline in Memory Pricing

In the first quarter of the year, the global health crisis pushed the global NAND market to grow by 8.3 percent annually. Cloud service providers and online application companies experienced a massive usage spike from newly homebound students and workers. To compensate, firms ordered large quantities of non-volatile and flash memory to bolster their digital infrastructures.

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However, local governments initiated regional quarantines to halt the spread of the coronavirus, which disrupted the worldwide supply chain. Consequently, even Big Tech firms like Microsoft could not source enough components to meet their needs earlier this year. As memory production and shipping returned to normal, online companies stockpiled DRAM and NAND to avoid future shortages.

Because of the buyer inventory glut, memory chip suppliers saw a drop off in demand for their offerings. In response, vendors began marking down their products, which caused an estimated market-wide pricing decline of 5 to 10 percent in Q3. The analyst firm also notes supplier yields of 128L NAND chips have been robust, which will further depress pricing.

Because of those two factors, the company expects memory prices to fall by 10 to 15 percent sequentially in Q4.

Negative Near-Term Outlook

DigiTimes’ research aligns with TrendForce’s forecast as it predicts a 10 percent sequential contraction in memory prices in Q4. However, the organization believes the negative DRAM and NAND pricing trend will extend into the first six months of 2020.

Typically, memory prices rise in the latter half of the year because electronics manufacturers stock up on flash and non-volatile chips before starting volume production of their latest offerings. OEMs traditionally launch new flagship products in Q3 and Q4 to take advantage of holiday season demand. However, TrendForce believes even the release of the new iPhone will not be enough to offset the market slump.

That said, the long-anticipated introduction of a ninth-generation video game console will buoy the memory sector. Sony reportedly doubled its manufacturing quota for its PlayStation 5 console to meet unexpectedly high demand. Since analysts expected the system’s volume production to drive up interest in NAND by 5 percent, Sony’s larger order could prompt an industry-wide pricing uptick.

Nevertheless, the memory chip oversupply will likely hinder the market’s growth in the near-term.

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