Let Bolaji be Bolaji
by 
A sluggish PC market coupled with DRAM oversupply is hurting DRAM suppliers. But for buyers, this means continued price declines in the third quarter. Revenue in the global DRAM industry reached $11.4 billion in the second quarter (Q2) of 2015, down by 4.8 percent from the previous quarter, primarily due to about a 10 percent quarterly decline in the average contract price, according to DRAMeXchange, a division of TrendForce.
While all DRAM makers experienced a revenue decline, their margins did not shrink significantly due to their advances in process technology, according to DRAMeXchange.
“The real test for the DRAM industry will arrive in the next few quarters,” according to Avril Wu, DRAMeXchange’s assistant vice president. “Weak demands persist in the notebook and smartphone markets, and the 20 and 21nm processes are increasing the DRAM supply at the same time. DRAMeXchange therefore expects the decline of DRAM prices to extend further in the future.”
"In terms of global DRAM market share based on revenue, Samsung and SK Hynix respectively took 45.1 percent and 27.7 percent in the second quarter," Wu continued. "Together, the top two suppliers accounted for over 70 percent. Conversely, Micron’s market share fell to around 20.6 percent during the same period mainly because of falling prices and lack of bit supply growth."
The latest DRAM price report from DRAMeXchange finds that the average contract price of DDR3 4GB memory products fell 15 percent from $24 in June to $20.5 in July, with the lowest contract price at $20.
“The global economy has entered an uncertain period,” stated Wu. “This results in downward revisions in performance forecasts across the DRAM industry, from wafer foundry’s capacity utilization rate to mobile phone and notebook shipments. Hence, DRAM prices will certainly sink below $20 in the third quarter.”
On the supply side, a couple of things have been happening that have impacted pricing. “The bit output from original DRAM suppliers keeps rising, but the weak global economy has lowered bit consumption, which results in inventory accumulation. In July, the excess DRAM capacity caused contract prices for PC DRAM to drop significantly as well as negatively affecting server DRAM prices, which has declined nearly 10 percent,” stated Wu.
This will likely result in continued price declines for both PC and server DRAMs. “Since PC and server DRAM prices have high correlation, the falling PC DRAM prices will frustrate efforts to moderate the ongoing price decline in the server DRAM market,” according to DRAMeXchange analyst Angel Liou.
“Moreover, falling DDR4 prices has led to a notable price reduction for the DDR3 memory. The average contract prices for 8 GB and 16 GB DDR3 R-DIMM products were respectively down to $64 and $116 by the end of July, representing a monthly drop of five to six percent. DDR4 R-DIMM memory had an even greater price decrease in July, with both 8 GB and 16 GB products falling by eight to nine percent in average compared with the prior month. The current price difference between DDR3 and DDR4 is just 7 percent and will continue to shrink," Liou continued.
Although there is still a $40 price difference between the lowest and highest prices of DDR4 32 GB R-DIMM contract prices, DRAMeXchange analysts see that price gap shrinking, and expect DDR4 32GB R-DIMM to become the mainstream module for servers by the end of 2015.
Related posts
