According to the latest report released by DRAMeXchange, the contract price of both DRAM chips and NAND Flash chips has declined, with DRAM forecasts down 5% or more.
Although the strategy of the main supplier of DRAM is to adjust the supply to control the price decline rate, for example, Samsung has clearly released the signal to slow down the investment in increasing production capacity. However, as the 1X/1Y nm yield rises and the market demand is not high enough, the supply quantity increased from the third quarter.
DRAMeXchange even gave a forecast of 2019 that DRAM prices may fall by as much as 15-20%. If buyers are on the sidelines, it may cause a bigger drop in DRAM prices.
As for NAND Flash, 2018 is declining throughout the year and will not change in the fourth quarter. According to some studies, the current 64-layer 3D TLC yield is as high as 90%, and the 72-layer next year will further compress the profit margin of NAND flash.
Despite NAND prices falling by 15% in 2018, shipments are increasing by 45%. That means revenue is also expected to climb 23% from $54 billion to $66 billion. The mobile segment also commands a significant chunk of the demand at 36%. Data centers with their enterprise SSDs account for 21%, while regular client SSDs account for 24%.
On the supply side, some manufacturers have slowed down their production expansion in response to the market trend in the first half of this year. Therefore, the next-generation 9x-layer NAND Flash process will not see sizeable shipment until 2019. The Yangtze Memory Technologies Company (YMTC), another focus of the industry, will also have limited impact on the supply in 2018 as well, since the new capacity of YMTC will not be sizeable until 2019.
Average prices for DRAM are rising, and will finish 2018 increasing 38% after rising 81% in 2017, according to researcher IC Insights. The good news for DRAM buyers is that capacity is being added and will ramp up later this year and in 2019—resulting in more supply and falling prices.
The added capacity coupled with little growth in unit demand will result in “DRAM transitioning very quickly from shortage to oversupply,” said Jim Handy, general director and semiconductor analyst at research firm Objective-Analysis based in Los Gatos, Calif. DRAM prices will fall as a result, although there is a difference of opinion on how much.
“Prices are going to collapse by 68%,” said Handy. The average price per gigabyte for DRAM will fall from $7.07 in 2018 to $2.57, he said.
However, other researchers forecast more modest price declines. The average price of DRAM will fall 6% next year and 14% in 2020, according to IC Insights.
Related News:
Intel CPU Shortage To Impact DRAM Prices
China’s Nand Industry Impact on Global Markets
Samsung Decided to Postpone its DRAM Capacity Expansion Plan