Server DRAM prices have started to stabilize heading into the fourth quarter of 2015 thanks to rising demand from large data centers, according to the latest report from DRAMeXchange, a division of TrendForce. This follows significant price declines in the third quarter due to weaker global demand for servers.
Despite weaker demand than expected in the second quarter, worldwide server shipments grew 9.2 percent from the third quarter of 2014, and vendor revenue increased 7.5 percent year over year, according to a new report from Gartner Inc.
However, growth results were mixed, depending on the region. "The third quarter of 2015 produced growth on a global level with mixed results by region," said Jeffrey Hewitt, research vice president at Gartner, in a statement. "All regions showed growth in both shipments and vendor revenue, except for Eastern Europe, Japan and Latin America, which posted revenue declines of 5.8 percent, 11.7 percent and 24.2 percent, respectively, for the period. Currency exchange rates are one of the main reasons for the disparity in regional server market performance."
In November, DRAMeXchange reported that DRAM manufacturers were reallocating manufacturing capacity from PC DRAM to server DRAM and mobile DRAM production due to more stable prices and higher margins.
The latest DRAMeXchange report finds that the average contract price of DDR3 R-DIMM fell significantly in November compared to October as demand shifted to DDR4 R-DIMM. Contract prices for 16-GB DDR3 R-DIMM fell by as much as six percent on average in November, reaching $95, while contract prices of 16-GB DDR4 R-DIMM fell about four to five percent to $99 on average due to increased demand from data centers, according to the market researcher.
However, DRAMeXchange finds that 32-GB DDR4 R-DIMM contract prices continued to fall, dropping almost nine percent on average in November.
“The market is expected to remain weak in 2016, so server DRAM prices will keep sliding,” said DRAMeXchange analyst Angel Liou, in a statement. “The general prices of DDR4 and DDR3, however, are not expected to fall as quickly as they have in the past quarters, as their prices are gradually starting to approach parity in the fourth quarter. This is expected to bring an end to the price comparison effect that had been typical of the previous few quarters."
Liou expects Intel’s next-generation server CPU platform, Purley, to be released in 2017, will be a major demand driver. But until then, she doesn’t expect any significant upgrade demand for servers. However, the upgrade demand in 2016 will primarily come from the release of Intel’s Xeon E5 v4 Broadwell-EP server processor, she said.