Semiconductor Industry
The author is an analyst for NH Investment & Securities. He can be reached at hwdoh@nhqv.com -- Ed.
Memory makers are recently being seen reviewing product price hikes. DDR5 spot prices have turned upward, and contract prices are expected to rise from 3Q23.
YMTC boosts NAND price tags
Looking at industry data, China's YMTC has boosted its NAND prices by 3~5%. Meanwhile, Samsung Electronics (SEC), SK Hynix, and Micron are also known to reviewing memory price hikes. We note that SEC rejected NAND orders priced lower than the April level. And, Micron has reportedly notified distributors that it will (from May) stop accepting low-price orders for both DRAM and NAND.
DRAM spot prices compiled by DRAMeXchange have continued to rise since May 3 for DDR5 16Gb. We expect memory contract prices to turn upward from 3Q23. In general, spot prices move three to four months ahead of contract prices. The recent spot price fluctuations are raising the possibility of a rise in contract prices in 3Q23.
Memory makers’ earnings to improve from 3Q23
The recent improvement in memory supply-demand conditions is attributable to memory makers’ production cuts and increased demand. All three memory makers are cutting production at a meaningful level. Demand is improving, starting with high-performance PCs.
Due to aggressive inventory adjustments by customers from 2Q22, some set inventory peaked in 1Q23 and turned to decline. Orders from customers are resuming due to production cuts. And, memory inventory is to decline after peaking in 2Q23. In 2H23, hyperscaler investments should resume in line with rising utilization rates at data centers.