Price increases for mobile, PC and server DRAMs are starting to moderate in the first quarter of 2018 as suppliers expand and reallocate production capacity. Following an average price hike of about 40 percent in 2017, DRAM prices are forecast to increase in single-digit percentages in the first and second quarters of 2018, according to the latest analysis from DRAMeXchange, a research division of TrendForce.
“The overall average selling price (ASP) of DRAM will increase by 3 percent in the second quarter (Q2), lower than 5 percent in the first quarter (Q1), Avril Wu, research director of DRAMeXchange told EPSNews. “Specifically, the ASP of mobile DRAM, PC DRAM and server DRAM will increase by 3 percent, 3 percent to 5 percent, and 0 to 3 percent, respectively, in Q2.”
“For 2017 as a whole, PC DRAM prices went up about 50 percent, and the numbers for server DRAM and mobile DRAM were about 45 percent and 15 percent, respectively,” added Wu. “As for Q1 2018, our ASP forecast is 5 percent.”
The major DRAM suppliers increased prices by 10 percent to 15 percent in the fourth quarter (Q4) of 2017 due to strong demand from the smartphone market and North American data centers. Mobile DRAM prices, alone, rose 5 percent to 20 percent in Q4. Other DRAM products saw price increases of 5 percent to 10 percent in Q4.
The result was sequential global revenue growth of 23.6 percent for mobile DRAM in Q4, reaching a new high of $8 billion, according to DRAMeXchange. The total server DRAM revenue for the top three DRAM suppliers – Samsung, SK Hynix and Micron – grew by 13.9 percent in Q4 thanks to higher ASPs.
Overall, the top suppliers increased revenues significantly in the fourth quarter. The best performer was Micron, which grew its sales by 58.8 percent, causing the combined revenue share of the two leaders – Samsung and SK Hynix – to drop to 82.5 percent, down from 85.6 percent in Q3, according to DRAMeXchange. Total DRAM revenue grew by 14.2 percent in the fourth quarter and by 76 percent in 2017.
However, in the first quarter of 2018, global mobile DRAM revenue is forecast to grow slower due to weaker-than-expected demand for smartphones. According to DRAMeXchange analysts, smartphone OEMs have readjusted their production plans and postponed materials purchases due to rising inventories for mobile DRAM and other components.
As a result, there is less of a chance for major price hikes in Q1 for contract buyers. However, Wu still expects quarter-over-quarter ASPs for mobile DRAM to increase by 3 percent in Q1 2018. In addition, China’s National Development and Reform Commission (NRDC) has put a squeeze on further price hikes.
The pricing market for PC and server DRAMs is a slightly different story. Wu expects contract prices for PC DRAM to increase by 5 percent in the first quarter of 2018, compared to Q4 2017, while server DRAM prices increase by 3 percent to 5 percent quarter over quarter in Q1.
There is still some tight supply for server DRAM in the first quarter due to strong data center demand even though DRAM suppliers have allocated more of their production capacity to their server product lines, according to DRAMeXchange.
“As the capacity is readjusted for server DRAM, the tight supply is being eased,” said Wu. “Therefore, we have been moderating our forecasts of server DRAM ASP hikes from the previous 15 percent to the current 10 percent year over year,” said Wu.
Still, buyers will need to keep a close watch on the mobile DRAM market to ensure a steady supply due to the capacity “readjustment.” Wu said it is possible there could be tight supply for mobile DRAM this year as DRAM suppliers reallocate their production capacity from mobile DRAM to server DRAM.
Wu anticipates tight supply for PC DRAMs in Q1 “as the production volume of PC DRAMs will not have an obvious rise. This is because the production of PC DRAMs is not a priority for suppliers, considering the profitability of products.”
Currently, average lead times for PC DRAMs and server DRAMs is 8 to 10 weeks, while deliveries for mobile DRAMs range from 9 to 11 weeks, according to DRAMeXchange.
Despite the scaled back price increases, DRAMeXchange expects the overall DRAM revenue to increase by more than 30 percent in 2018, reaching $96 billion. The increase includes the 10 percent ASP improvement and about 20 percent supply bit growth, said Wu.