For First Time in 6 Months
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
For the first time in six months, DRAM spot prices are rebounding. Non-face-to-face demand for PCs and servers is increasing again due to the re-spreading of Covid-19. Sales of the iPhone 13 series remain solid. We expect the DRAM spot price uptrend to continue moving ahead.
DRAM spot price rebounds for first time in six months
On Nov 26, the spot price for 16Gb 2,666Mbps DDR4 DRAM, as reported by DRAMeXchange (aggregate basis), turned to rise. We note that 16Gb DDR4 is currently the main product on the market. The spot price expansion for this item represents the first increase since Jun 17. If the spot price rebound continues, we can expect a recovery in contract prices after 2Q22. Usually, spot prices precede contract prices by about six months.
Recently, due to concerns over the re-spreading of Covid-19, demand has resumed for online education and other non-face-to-face activities (eg, telecommuting). Hyperscalers such as Meta, Amazon, and Microsoft are increasing their memory semiconductor orders again to cope with supply chain instability due to the re-spreading of Covid-19, despite currently high memory inventory levels.
Non-face-to-face demand rising again on re-spreading of Covid-19
PC demand is expected to remain steady. PC demand growth, which peaked in July and then slowed, is picking up again amid the re-proliferation of Covid-19. Structurally-established hybrid work systems are also contributing to PC sales. HP and Dell have presented healthy 4Q21 guidance. While noting that demand for PCs still outweighs supply, HP’s CEO has also said that earnings would have been better without supply chain issues. HP shares rose 10% on Nov 24 following its earnings announcement.
Smartphone sales are also improving. Chinese smartphone shipments in October came to 32.68mn units (+31% m-m, +57% y-y). Of note, iPhone 13 sales are setting record highs, and wait times for some iPhone 13 Pro and 13 Pro Max models remain above one month. We expect this trend to continue into the 1Q22 off-season.