Since last year, the price of DRAM, which had been on a downward trend throughout the first quarter of this year, has recently shown signs of recovery, thanks to subsidies from China, the acquisition of artificial intelligence (AI) infrastructure, and demand for inventory stocking. Domestic securities firms expect the short-term rise in DRAM prices to improve the performance of Samsung Electronics and SK hynix starting in the second quarter, but Morgan Stanley and others observe that this is just a temporary phenomenon and that a 'V-shaped' rebound like in the past will be difficult.
According to industry sources on the 20th, the recent adjustment of mobile DRAM inventory in China is nearing completion, leading to price increases centered on DDR4 and LPDDR4 DRAM. As China's CXMT finds it difficult to meet demand due to its limited production capacity, exports of DRAM from Samsung Electronics and SK hynix to China are increasing.
With the demand for LPDDR4, primarily installed in mid-range smartphones eligible for the Chinese government's 'Yiguhuanxin' (replacing old products with new ones) subsidies, the supply of DRAM from Samsung Electronics and SK hynix is increasing. Lee So-rim, a researcher at a Research Institute, noted, "It appears that orders for DDR5 for high-performance PCs and servers have increased in China," adding, "There is a possibility that some orders were placed earlier due to concerns over rising tariffs, but demand for DDR5 for servers is expected to increase further in the second half of the year."
The researcher also said, "Although NAND flash still has high inventory levels among clients and memory firms, it seems that requests for quantities from Taiwanese module manufacturers are increasing," and added, "For now, it appears that companies are stocking up on inventory amid a reduction plan, but purchasing will continue during a rebound in actual demand in the second half." This is expected to have a positive impact on the second-quarter performance of Samsung Electronics and SK hynix.
Market research firm DRAM Exchange projected that prices for DRAM used in PCs would fall by 5-10% year-on-year in the first quarter, but would rise by 3-8% starting in the second quarter, strengthening further in the second half of the year. Server DRAM is also expected to increase in price after a drop of 3-8% in the first quarter, while mobile DRAM is expected to see a price increase of 0-5% beginning in the second quarter. Graphics DRAM is anticipated to maintain price stability due to demand for high-performance graphics processing units (GPUs).
Morgan Stanley expressed a similar view in a recent report regarding the rise in memory prices in the second quarter. They suggested that if the market recovers rapidly, the possibility for DRAM prices to show higher-than-expected signs of recovery also exists. They predicted that NAND flash prices could rise by up to 10% in the second quarter due to proactive reductions by major companies like Samsung Electronics, SK hynix, and Kioxia.
However, it was evaluated that achieving a 'V-shaped recovery' like in the past will be difficult. This is because the global economic downturn and geopolitical risks (tariffs, trade conflicts, etc.) could negatively impact the semiconductor market. In particular, weaknesses in consumer sentiment for NAND flash in the second half, along with a price war among Chinese companies, are likely to be influential variables.
Morgan Stanley also showed a cautious stance regarding the high bandwidth memory (HBM) market, which is the biggest variable for the performance of Samsung Electronics and SK hynix this year. They stated, "Whether the demand for AI servers holds will be a key factor in the HBM market," and added, "If capital investments by U.S. cloud companies slow down, HBM could also experience increased stock burdens in the short term."