After increased shipments in the first and second quarters of 2015, shipments of brand-name enterprise servers have slowed in part due to a weak global economy and currency rate fluctuations, resulting in lower DRAM prices, particularly for servers, according to TrendForce.
TrendForce reports the average contract price of DDR4 R-DIMM products have declined as much as 15 percent by the end of August, according to the latest DRAM price report from DRAMeXchange, a division of TrendForce. The research group expects the lowest DDR4 R-DIMM price to reach parity with DDR3 prices as early as the end of the third quarter. “This decline in DDR4 prices will in turn increase the demand to upgrade existing enterprise servers to Intel’s Grantley platform.”
“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,” according to Angel Liou, analyst at DRAMeXchange. “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 also expects 32-GB module pricing to drop sharply in 2016, when the 8-Gb mono-die production gradually matures. This means capacities of mainstream server DRAM modules are expected to increase from 8GB/16GB in 2015 to 16GB/32GB next year, she said.
However, there are some challenges ahead with the lack of next-generation products in 2016. DRAMeXchange expects continued price pressure on server DRAMs in the first half of 2016 in part due to server DRAM products not moving into next-generation products, and Intel not scheduled to release its upcoming platform, Purley, until 2017. This will further squeeze DRAM suppliers’ profit margins, said DRAMeXchange.
The bright spot is growth of white-box and Chinese-branded server shipments in the third quarter, said DRAMeXchange. Despite weaker domestic demand this year and slowing shipments of Chinese-branded servers, compared to last year, four major Chinese server suppliers – Lenovo, Inspur, Huawei and Sugon – have grown their combined global market share by two percent to 12.4 percent, said the market researcher.
Despite lower quarterly shipments this year compared to last year, DRAMeXchange expects total white-box server shipments to increase by nearly 20 percent, accounting for the majority of total server shipments in the third quarter.
This follows growth of eight percent year over year for global server shipments in the second quarter of 2015, according to Gartner Inc. The market researcher believes that some companies used their budgets earlier in the year to better utilize their purchasing power ahead of expected currency rate shifts. All five global vendors – HP, Dell, IBM, Lenovo, and Cisco - increased revenues in the second quarter with the exception of IBM, said Gartner.