13 May 2024 -

Upheaval in DRAM: 15-25% price increase possible

HBM High Bandwidth Memory

The memory market is experiencing major upheaval under the transformative impact of AI applications. Industry leader SK Hynix reports a staggering 144.3% year-on-year surge in revenue and predicts that this strong demand trajectory will continue. This optimism aligns with predictions from multiple sources that DRAM product prices could rise by 15-25% in the second quarter.

Several factors are driving this price escalation. The expanding use of high-end memory products like HBM in AI workloads is simultaneously pushing up prices and leading to a potential supply squeeze in general DRAM products. SK Hynix is prioritising the production of HBM3e and next-gen DDR5 to capitalise on this demand. Despite an earthquake in April, TrendForce estimates that DRAM production was only minimally affected, with a mere 1% production hit. Major players such as Micron, Nanya, and Winbond quickly rebounded to full capacity. Additionally, as major manufacturers scale back production of legacy DDR3 and DDR4, supply is tightening. Remarkably, DDR3 and DDR4 prices could climb by as much as 50-100% in the second half of the year, offering a boost to Taiwanese producers.

The SSD and HDD market faces a complex supply-demand dynamic. While AI fuels HDD shortages and price hikes, SSDs continue to gain ground in the consumer segment due to their superior speed and narrowing price gaps. Western Digital warns of persistent shortages and ongoing pricing adjustments.

These trends carry significant implications for the electronics industry. Engineers and companies must brace for escalating DRAM prices and potential ripple effects on other memory types impacted by AI demand. Supply chain planning and price forecasting become paramount. Optimising designs around available memory technologies could become essential, which may involve seeking alternatives in the legacy memory market. Proactively cultivating relationships with multiple memory suppliers will be crucial for mitigating the risk of shortfalls and securing favourable pricing amidst market volatility.

The memory market is likely to remain unsettled in the short term as AI technologies mature and demand patterns evolve. Companies that adopt agile supply chain strategies and actively monitor emerging trends will be in the strongest position to navigate the challenges and capitalise on the opportunities within this dynamic landscape.

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