Tuesday, March 31, 2020
DRAM Chip Prices Stop Falling
Amid Concern about Production Setbacks
DRAM Chip Prices Stop Falling
  • By Kim Eun-jin
  • September 2, 2019, 09:05
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DRAM prices have stopped falling, but analysts say it is still unclear whether they have hit the bottom.

Market research firm DRAMeXchange reported on Aug. 30 that the average price of 8 Gb DDR4 DRAM chips, which are used mainly in PCs, was US$2.94 that day, showing no change from the previous month. The price slightly rose in December last year and fell for seven months in a row from January to July this year. During the same period, the price dropped no less than 59.4 percent, led by an inventory glut and a sluggish demand attributable to the ongoing economic recession.

“Chinese buyers are expressing more and more concerns that Japan’s semiconductor material export restrictions will lead to production setbacks on the part of DRAM chip manufacturers such as Samsung Electronics and SK Hynix,” said Mirae Asset Daewoo analyst Kim Young-gun, adding, “As a result, the manufacturers got the upper hand in their price negotiations in spite of their inventory situations.” He went on to say, “Nonetheless, it remains to be seen whether the DRAM chip price has actually hit the bottom in that the price stopped falling with the inventory and demand as they are.” Another industry source also said that the recovery of the industry is being postponed and it cannot be said for sure whether the price will continue to move sideways.

In the meantime, the price of 128 Gb MLC NAND chips, which are used in solid state drives, USB drives, and the like, rose from US$4.01 to US$4.11 last month. The price rose for the second consecutive month and the rate of increase hit a 29-month high. Still, the price is much lower than the previous high price, US$5.87, recorded in August 2017.

“There were some predictions that a rapid increase in DRAM chip spot price would lead to an increase in contract price, but Japan’s semiconductor material export restrictions had no significant impact on South Korean manufacturers’ memory chip production activities,” DRAMeXchange explained, adding, “Concerns over the shortage of materials have been addressed to some extent with the Japanese government still allowing the export of hydrogen fluoride to major South Korean companies.” It continued to say, “The disappearance of the shortage factor means that supply and demand will determine the DRAM chip price trend again and the inventory level, which is still high, is likely to block a rise in price in September.”

When it comes to NAND flash market situations, the research firm said that Toshiba's power outage led to the higher price and the situations are likely to keep fluctuating for a while.