The rise in commodity DRAM prices is continuing in the second quarter of this year faster than expected. Contrary to market research firms' projections that demand would gradually ease starting in the second quarter after a spike in the first quarter, global requests to supply DRAM to Samsung Electronics and SK hynix are increasing. However, because DRAM production capacity is allocated to high-bandwidth memory (HBM), it is reportedly difficult to again raise the share of commodity DRAM, making it hard to meet demand.
According to the industry on the 29th, market research firm TrendForce initially expected a 55%–60% rise in commodity DRAM prices in the first quarter of this year, but later revised it up to 90%–95%. That is 35 percentage points higher than the previous outlook. Adding the projection for a further 58%–63% rise in the second quarter, the pattern has shifted from cooling after a first-quarter surge to a step-up in the overall price level through the second quarter.
The biggest reason is that the DRAM volume fixed as "HBM-dedicated" has made it harder for Samsung Electronics and SK hynix to respond to commodity DRAM demand. As the absolute volume of commodity DRAM from the two companies, which supply more than 70% of the world's DRAM, has decreased, there are now cases where the profit margin of DRAM, whose production process is relatively simpler than that of the high value-added HBM, exceeds it by four to five times. In fact, it is known that in the first quarter of this year, the "surprise results" of Samsung Electronics' DS (semiconductors) institutional sector were driven more by DRAM than HBM.
HBM's impact on total DRAM production capacity is growing. A person familiar with Samsung Electronics said, "The HBM transition has a bigger impact on supply than a traditional product mix change," adding, "As HBM technology advances, it consumes more DRAM and the process lead time becomes longer. It is hard to respond as flexibly as with commodity DRAM." Earlier, Micron noted that HBM production uses about three times the DRAM production capacity compared with DDR5.
TrendForce analyzed that even though the outlook for PC DRAM demand has been revised downward, suppliers are reducing shipments to PC makers and module firms, leading companies with insufficient allocations to secure products at higher prices. Consumer DRAM is also projected to rise an additional 45%–50% in the second quarter of this year. The average price of DDR4 4Gb rose more than 20% in March alone, and DDR3 and DDR2 prices also climbed 20%–40% in the same month.
It is difficult to reduce the HBM share just because commodity DRAM prices are surging right now. Samsung Electronics and SK hynix are competing for leadership in the HBM4 (6th-generation HBM) market and have signed long-term contracts with key customers such as Nvidia, Broadcom, and OpenAI. Since it allows for more stable medium- to long-term revenue generation than commodity DRAM, the analysis is that they have no choice but to invest more resources in HBM, accepting short-term profit losses from the "HBM tilt."
The industry sees a strong possibility that this kind of supply bottleneck will continue into the second half of the year. For DRAM companies to increase shipments of commodity products, they would need to readjust production lines, but HBM is tied to customer qualification and packaging and back-end processes, making it difficult to redirect volumes in a short time. A semiconductor industry official said, "Right now, rather than being happy about higher prices, DRAM companies simply lack sellable volume," adding, "From customers' perspective, if they fail to secure needed volumes, even product launch schedules could be disrupted, so pricing power is shifting strongly to suppliers."
Meanwhile, the spike in DRAM prices is spreading to cost pressures for PC, smartphone, and server makers. In particular, budget smartphones and low-cost PCs, where memory makes up a relatively large share of costs, could face greater price-hike pressure. Server makers are also competing to secure not only HBM for AI servers but also DDR5 for general servers and high-capacity modules, deepening the overall supply-demand imbalance in memory.