TechPowerUp - DRAM Prices Projected to Decline by 3-8% QoQ in 4Q21 Due to Rising Level of Client Inventory, Says TrendForce
Following the peak period of production in 3Q21, the supply of DRAM will likely begin to outpace demand in 4Q21, according to TrendForce's latest investigations (the surplus of DRAM supply is henceforth referred to as "sufficiency ratio", expressed as a percentage). In addition, while DRAM suppliers are generally carrying a healthy level of inventory, most of their clients in the end-product markets are carrying a higher level of DRAM inventory than what is considered healthy, meaning these clients will be less willing to procure additional DRAM going forward. TrendForce therefore forecasts a downward trajectory for DRAM ASP in 4Q21. More specifically, DRAM products that are currently in oversupply may experience price drops of more than 5% QoQ, and the overall DRAM ASP will likely decline by about 3-8% QoQ in 4Q21.
Global production of notebooks is expected to decline in 4Q21, in turn propelling the sufficiency ratio of PC DRAM to 1.38%, which indicates that PC DRAM will no longer be in short supply in 4Q21. However, PC DRAM accounts for a relatively low share of DRAM manufacturers' DRAM supply bits, since these suppliers have allocated more production capacities to server DRAM, which is in relatively high demand. TrendForce therefore expects an imminent 5-10% QoQ decline in PC DRAM contract prices for 4Q21, with potential for declines that are even greater than 10% for certain transactions, as PC OEMs anticipate further price drops in PC DRAM prices in the future.
Server DRAM prices are expected to decline for the first time this year, by 0-5% QoQ due to high client-side inventory. TrendForce expects server DRAM prices to undergo a decline for the first time this year in 4Q21 with a QoQ drop of 0-5%.
Mobile DRAM prices are expected to remain relative unchanged from 3Q21 levels despite a possible price drop ahead of time at the end of the year. Given the uncertain state of the pandemic in the coming winter, smartphone brands will adopt a more conservative attitude towards both smartphone production and component procurement in 4Q21. Mobile DRAM still lags behind other DRAM product categories in terms of profitability, meaning a drop in mobile DRAM prices is unlikely. Taking these factors into account, TrendForce expects prices of discrete DRAM, eMCP, and uMCP to mostly hold flat in 4Q21 compared with 3Q21.
Graphics DRAM contract prices are expected to decline by 0-5% QoQ due to excess supply
Market demand for discrete graphics cards and notebook graphics cards still remains due to the stable market for commercial notebooks and the resurging cryptocurrency mining market, which saw cryptocurrency prices rebounding from rock bottom levels within the past two months. However, severe issues with the availability of components in the graphics card supply chain currently present the most significant bottleneck in graphics card production. In particular, components such as driver IC, PMIC, and other peripheral components are all in shortage, while graphics DRAM is in relative oversupply compared to these other components. Graphics card manufacturers are therefore revising down their graphics DRAM procurement. Demand for graphics DRAM will unlikely see a resurgence before the end of 2021. As spot prices are the first to enter a downturn, and the aforementioned market conditions lead to sluggish procurement activities, graphics DRAM prices are in turn expected to plummet from previous levels in 4Q21, although this decline is projected at a minor 0-5% QoQ owing to DRAM suppliers' efforts to keep prices constant.
The severe shortage in electronic components, has adversely affected the demand for consumer electronics, such as TVs, STBs (set-top boxes), and networking devices, as well as industrial-use products, thereby also reducing the procurement demand for consumer DRAM. As server and PC manufacturers' DRAM inventory level rises, contract prices of those DRAM products will likely decline in 4Q21. DDR4 consumer DRAM prices are expected to decline by 5-10% QoQ in 4Q21. Likewise, DDR3 consumer DRAM prices will also undergo an overall decline, particularly for 4Gb chips. DDR3 consumer DRAM prices are expected to decline by 3-8% QoQ in 4Q21.
My thoughts: Overall DRAM prices are declining slightly and in the case of VRAM, it is because of a shortage of other components by the GPU manufacturers.
ASP – Average Sales Price