DRAM ASP Poised to Continue Descent into the Second Half-Year
March 25, 2019 | TrendForceEstimated reading time: 4 minutes
DRAMeXchange, a division of TrendForce, points out that the drop in DRAM contract prices continues to grow in the first quarter due to the overabundance in inventory levels, falling by over 20% in overall ASP. The accelerating drop in prices did not stimulate a recovery in demand, and transactions have still been few. DRAM ASP is predicted to continue falling well into the third quarter as inventories clearouts have yet to be completed.
According to research by DRAMeXchange, inventory levels accumulated by DRAM suppliers (including wafer banks) have generally come to over 6-weeks' worth at the end of the first season. Although inventory levels may vary among buyers due to different product categories, they stand at up to 5 weeks on average at the very least. Server and PC customers even possess inventory levels over 7 weeks' worth.
Supply bit will continue to grow as the second season begins, thanks to contributions from the 1Ynm process. With an aim to greatly reduce inventory levels, DRAM suppliers in general will continue to adopt large price-lowerings in order to stimulate sales. Prices drops will be greatest in PCs and server DRAMs just like the first season, coming to a decline of 20%, while mobile DRAMs will drop by a smaller 10~15% due to the pull created by customers as they buy new phones. DRAM ASP is predicted to continue descending by 20% in the second season.
As for whether price drops may successfully shrink in the second half of this year, it depends on demand recovery and the extent to which inventories clear out in the second quarter. A DRAMeXchange analysis predicts that end demand recovery will be the key factor determining whether DRAM sales hit rock bottom, since average DRAM content-per-box in 2019 will perform worse than last year across all product categories. But simply judging from the supply-demand prediction that oversupply will be far less serious in 2H than in 1H, price drops may be expected to undergo gradual contractions in the third and fourth seasons.
Declines Show No Signs of Shrinking for PC and Server DRAM, While Slowing for Mobile DRAM
Looking at the price trends of various DRAM applications for this year, commodity DRAMs and server DRAMs exhibit the most salient drops since the fourth quarter last year due to higher inventory levels. PC demand was quite sluggish in the first half-year owing to the lack of shipment growth and the yet-to-be-alleviated Intel CPU shortage in mid-range and low-end devices. Mainstream 8GB commodity DRAM module solutions, for example, have fallen by 30% in price in the first quarter, with the bottom price lying around 40 USD. ASP will proceed to move towards 35 USD in the second season looking forward, and may even hit the 30 USD threshold by year-end.
After going through a two-year streak of high demand, server stock ups are starting to show significant signs of failure thanks to the rather high inventory levels in 1Q and the arrival of the traditional offseason for OEMs. Though a few North American datacenters have begun to place orders in March, the number of overall purchases has yet to see a clear revival. Furthermore, current inventory levels are high on both the supply and demand ends, and server DRAM prices are predicted keep on falling until inventory clears and demand recovers. DRAMeXchange predicts that declines will remain around 20% in the second season, and persist into the third and fourth season at around 10%.
For mobile DRAMs, total smartphone production has fallen by over 10% compared to last year in response to an unenthusiastic market. As a result, mobile DRAMs suppliers cannot effectively clear their inventories, causing prices to see new depths. Discrete and eMCP products have dropped by about 20% on average, resulting in no small commotion in market quotes. Contract prices are predicted to shrink compared to the first season, not only due to the increase in content-per-box initiated by the Android / iPhone duo, who are procuring parts for their new flagship devices, but also the transition from offseason to peak season, which will revitalize demand. However, considering that total smartphone production quantity will show negative growth this year, and the limited content-per-box growth in mid- range and low-end phones,contract prices still face an inevitable fall in the second and third season.
Lastly, we look at specialty DRAM price trends. A few set-top boxes and internet connectivity tenders have popped up in China after the lunar year holidays, pulling production ever so slightly. But after this one-time tender event, overall demand slumped nevertheless . As DDR3 supply remains higher than demand, this year's specialty DRAM prices are predicted to keep falling by 15% and 10% in 2Q and 3Q respectively.
About TrendForce
TrendForce is a global provider of the latest development, insight, and analysis of the technology industry. Having served businesses for over a decade, the company has built up a strong membership base of 435,000 subscribers. TrendForce has established a reputation as an organization that offers insightful and accurate analysis of the technology industry through five major research divisions: DRAMeXchange, WitsView, LEDinside, EnergyTrend and Topology. Founded in Taipei, Taiwan in 2000, TrendForce has extended its presence in China since 2004 with offices in Shenzhen and Beijing.
Suggested Items
Slight Dip in Q3 Revenues as IMI Copes with Global Slowdown
11/14/2023 | IMIIntegrated Micro-Electronics, Inc. (IMI) posts US$341 million of revenues in the third quarter of 2023, 3% lower year-on-year.
Global PC Monitor Market Sees 17.1% Decline in Q2 2023 Amidst Inventory Corrections with Prospects of a Holiday Quarter Rebound
09/26/2023 | IDCThe global PC monitor market remained steadfast in its efforts to manage inventory levels amidst a significant drop in demand during the second quarter of 2023 (2Q23).
Engagement Begins Before Employment
06/21/2023 | Brian Wallace, HR Strategies NowEmployee engagement is a major contributor to an organization’s productivity and results. In fact, it’s crucial for the long-term success of any business. That’s because an employee who is truly engaged tends to be more productive, committed to, and loyal to their employer. They typically bring more discretionary effort to the table and create less risk than their disengaged counterparts. Raise your engagement levels and you’ll tend to produce better results.
Philippines Tablet Market Slows Down in 1Q23 Declining 26.6% Annually
06/06/2023 | IDCAccording to the International Data Corporation (IDC) Worldwide Quarterly Personal Computing Device Tracker, the Philippines tablet market both declined 26.6% year over year (YoY) and 46.7% quarter over quarter in 1Q23.
Where Are Freight Costs Going?
05/24/2023 | Shawn DuBravac, IPCFor some electronics manufacturing companies, lower freight costs are likely to be their most significant cost savings this year. Decreased demand and improving supply chain dynamics are pulling freight costs down, a trend that should continue throughout this year. Downward cyclical pressures will curtail volume, which should keep prices in check.