Spot prices for DRAM, which had been soaring without limit, turned downward as the prolonged Middle East crisis coincided with profit-taking by distributors in the spot market. In China's largest distribution channel, there are even signs of a "panic selling," with DRAM prices dropping more than 30% in a week. The industry sees this plunge as a temporary phenomenon limited to used products, but is closely watching whether low-priced Chinese supply will become a catalyst that accelerates penetration into the global supply chain.
According to a survey by market research firm DRAMeXchange on the 7th, the spot price of DDR4 16-gigabit (Gb) modules, a mainstream PC DRAM product, stood at $73.09 as of the previous day. This is a further decline in just a week from late March ($74.3), and about 8% lower than a month ago ($79.4). The price of the main product, DDR5 16Gb modules, also fell to around $37.00 as of Apr. 6. It is more than 6% down from the peak two weeks ago ($39.5), showing a slowdown in the upward trend.
DRAM spot prices entered a broad correction phase at the end of February, when the United States raided Iran. The decline came as consumer sentiment weakened amid heightened tensions in the Strait of Hormuz and a wave of profit-taking by distribution dealers after a short-term surge. Concerns about Google TurboQuant (a memory optimization technology) also played a role. According to foreign media, in Huaqiangbei, Shenzhen, China's largest electronics market, DDR5 prices plunged about 30% in a week. However, the industry analyzes this as a drop centered on some used products rather than new products.
This fissure in the distribution market is cited as a variable that could accelerate the influence of Chinese-made products within the global PC supply chain. While the decline in domestic prices does not immediately deliver a direct blow to the earnings of Korean corporations, the flood of low-priced supply could be used as grounds for price-cut pressure in negotiations on fixed transaction prices with global finished goods makers going forward.
As Korean corporations such as Samsung Electronics and SK hynix focus on producing high-margin artificial intelligence (AI) high bandwidth memory (HBM) and the shortage of general-purpose DRAM supply persists, global manufacturers unable to withstand cost pressures have begun to turn to low-priced Chinese supply. According to the industry, U.S. companies HP and Dell recently began quality testing of DRAM products from CXMT.
Experts say concerns about falling DRAM prices are largely exaggerated by external factors such as the Middle East conflict and TurboQuant. Simon Woo, an analyst at Bank of America (BofA), analyzed, "Even if DRAM spot prices fall sharply, their share of total sales is negligible, so the impact on actual manufacturers' average selling price (ASP) will be limited."
Lee Seung-woo, head of research at Eugene Investment & Securities, said in a recent report, "While DRAM prices are not at a comfortable level, there are no worrisome changes in memory companies' fundamentals," adding, "Concerns about a product price peak-out are already reflected in valuations, and the main cause of the recent stock weakness is global macro uncertainty." He further projected, "As AI technology advances lead to a more sophisticated memory hierarchy, expectations for NAND flash, where investment has been insufficient, will become valid."
The domestic semiconductor industry plans to focus less on reacting to short-term price swings in the distribution market and more on the sharp rise in corporations' fixed transaction prices (contract price) expected to continue in the second quarter of this year. In fact, Samsung Electronics recently informed major clients that it plans to raise second-quarter DRAM supply prices by up to 30% from the first quarter.
This confidence is backed by solid corporate demand. The fixed transaction price for general-purpose PC products (DDR4 8Gb) is holding steady at $13, while the fixed price for NAND flash, where AI data center demand is concentrated, surged about 40% from the previous month, extending its record to 15 consecutive months of gains.
A semiconductor industry official said, "In a situation where supply of high-value AI memory such as HBM remains tight, short-term price adjustments for legacy (older) products should be seen as a normalization process for an overheated market," adding, "For server and enterprise-bound volumes, the core revenue source, pricing power remains with suppliers."