Institution: DRAM contract prices are expected to increase by 3-8% in the fourth quarter

The latest statistics from research firm TrendForce show that the average prices of DRAM and NAND Flash have started to rise comprehensively since the fourth quarter. Based on DRAM, it is estimated that the contract price will increase by about 3-8% in the fourth quarter. Whether this trend can continue depends on whether suppliers continue to adhere to production reduction strategies and the extent of actual demand recovery, with the most critical being in the field of general-purpose servers.

In terms of PC DRAM memory, due to the increase in average price of DDR5 in the third quarter, combined with the stocking of new CPU models, it is expected to continue to drive up demand for DDR5. Samsung has once again expanded its production reduction, but most of its original factories are unwilling to lower prices due to negative gross profit of DRAM products and want to rise strongly. Therefore, it is predicted that the price of DDR4 will increase by 0% to 5% month on month in the fourth quarter; The price of DDR5 increased by about 3-8% month on month; Overall, with the increase in DDR5 import rate, it is estimated that the PC DRAM contract price will increase by approximately 3-8% in the fourth quarter.

In terms of server memory, due to the increase in the proportion of DDR5 buyer inventory from 20% in the second quarter to 30-35%, the actual server usage rate of Q3 DDR5 memory is only 15%, indicating that the market adoption demand is not as fast as expected. At the same time, Samsung's expansion and production reduction have significantly limited the overall DDR4 production scale, and the supply side's Server DDR4 inventory has also begun to decrease. Therefore, there is currently no room for the Server DDR4 quotation to fall further. Server DDR4 memory Q4 is expected to remain unchanged, while server DDR5 memory is expected to continue to decline. Due to the increase in the proportion of DDR5 shipments, which is still 50-60% higher than the price of DDR4, the average retail price of the comprehensive product will increase. It is expected that the server DRAM memory contract price will increase by 3-8% month on month in the fourth quarter.

In terms of mobile DRAM, due to the early return of chip inventory to healthy levels and ample price elasticity, the memory capacity of new machines has increased, resulting in good sales in the second half of the year. On the other hand, even though smartphone production in the fourth quarter did not reach the same level as before, it still increased by 10% month on month, supporting mobile DRAM demand. At present, LPDDR4X or old process products with high inventory in the original factory are expected to have a contract price increase of 3-8%; The supply of LPDDR5 (X) memory is slightly tight, and it is estimated that the contract price will increase by 5-10% month on month.

In terms of graphics storage, as Graphics DRAM is a shallow market and the buyer's mentality has shifted to accepting price increases, it is expected that the purchasing end will continue to prepare for the mainstream specification GDDR6 16Gb to cope with the upward trend in 2024. And NVIDIA's new product Server GPU L40s, released in the third quarter, also helps to reduce inventory in the original factory. In addition, the sales performance of esports laptops this year is better than that of overall laptops, and currently, the inventory pressure faced by the original factory on graphics storage is not as large as other DRAM products. Therefore, it is estimated that the DRAM memory contract price will increase by 3-8% month on month in the fourth quarter.

In terms of Consumer DRAM, starting from September, Samsung has expanded its production reduction scale to alleviate the pressure on old product inventory. The reduction is expected to reach 30% in the fourth quarter. Under the expectation that inventory will decrease quarterly, the original factory, in order to avoid bearing the pressure of losses, intends to raise the Consumer DRAM contract price, with an expected increase of over 10%. Even though some original factories have raised contract prices by the end of September, demand still appears cold and procurement and stocking capabilities are not as strong as expected. This price trend has deviated from the supply and demand trend, and it is estimated that the Consumer DRAM contract price will increase by 3-8% in the fourth quarter, which is lower than the original factory's target.