Server DRAM Prices See Drop in 3Q Amid Slowing Global Demand


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Shipments of branded enterprise servers have slowed down and even dropped due to the weak global economy and currency rate fluctuations. These factors, together with the lackluster demand for all types of DRAM, are driving down server DRAM prices. The average contract price of DDR4 R-DIMM products had seen decline reaching 15% by the end of August, according to the latest DRAM price report from DRAMeXchange, a division of TrendForce. Furthermore, the lowest DDR4 R-DIMM price will reach parity with DDR3 prices as early as the end of this third quarter. This decline in DDR4 prices will in turn increase the demand to upgrade existing enterprise servers to Intel’s Grantley platform.

According to DRAMeXchange analyst Angel Liou, the ongoing price drop of DDR4 products has not only fueled the platform-upgrade demand but also contribute to the recent, impressive revenue results of front-end chip suppliers. These are indications that the server DRAM market might start to recover at the end of third quarter. At the same time, suppliers have adjusted their product mixes to favor mobile and server DRAM as a response to the weak PC DRAM market. By expanding their server DRAM capacities in face of falling PC DRAM prices, the suppliers will not be able to maintain server DRAM prices. On the whole, the decline in server DRAM prices will moderate, but the downward pressure remains.

Liou added that prices of 32GB modules will drop sharply in 2016, when the 8Gb mono-die production of respective DRAM suppliers gradually matures. Capacities of mainstream server DRAM modules are therefore expected to increase from 8GB/16GB of this year to 16GB/32GB next year. With the increase of DRAM capacity per server unit, the annual demand bit growth for 2016 will be able to reach 30%. On the other hand, server DRAM products will not be entering a new generation next year, and Intel is not scheduled to release its upcoming platform, Purley, until 2017. DRAMeXchange therefore concludes that the downtrend in server DRAM prices will persist during the first half of 2016, further squeezing DRAM suppliers’ profit margins.

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