DRAM Contract Prices Set to Soar 13-18% in 1Q24 Amidst Unyielding Price Surge

According to a recent report by TrendForce, the contract prices for DRAM are predicted to rise by approximately 13-18% in the first quarter of 2024, with mobile DRAM leading the surge. This increase is attributed to manufacturers’ efforts to maintain the supply-demand balance in the memory industry amidst uncertain demand outlooks for the entire year.

In the PC DRAM market, there is a buzz around unfilled DDR5 orders, while buyers are preparing for a continued surge in DDR4 prices. However, the industry is gradually shifting towards DDR5, creating uncertainty regarding the expansion of DDR4 procurement volumes. Despite this, both DDR4 and DDR5 prices have yet to reach the targets set by manufacturers, and buyers are prepared to face price hikes in the first quarter. It is estimated that PC DRAM contract prices will increase by 10-15%, with DDR5 taking the lead over DDR4 in this pricing rally.

In the server DRAM segment, buyers strategically depleted DDR4 stocks last year, resulting in an impressive 40% inventory of DDR5 in the fourth quarter of 2023. This figure surpasses the market penetration rate of 20-25%, indicating that the full extent of market demand has yet to be unleashed. Manufacturers are now constricting DDR4 supply while ramping up DDR5 production to boost their profit margins. As a result, server DRAM contract prices are expected to spike by a robust 10-15% in the first quarter of 2024. However, some manufacturers who had previously locked in higher price baselines may experience a more moderate 8-13% price hike.

The mobile DRAM market is characterized by contract prices lingering at historical lows, leading buyers to build up inventories that are both safe and cost-effective. This amplifies their purchasing power and ensures that mobile DRAM demand remains strong in the first quarter of 2024. Limited supply coupled with aggressive buying creates market tension that benefits manufacturers in price negotiations. However, due to uncertainties in the smartphone market, manufacturers are proceeding cautiously and not rushing to ramp up production. The complex nature of semiconductor processes suggests that this supply-demand tension will persist, potentially leading to a significant 18-23% increase in mobile DRAM contract prices in the first quarter. In scenarios of panic buying by brand-conscious customers, even higher price surges may be witnessed.

The graphics DRAM market has experienced a continuous upward price trajectory, prompting buyers to engage in a relentless stocking spree. The demand for mainstream GDDR6 16Gb specification remains robust, with the market open to embracing price upticks. This sets the stage for a projected 10-15% rise in graphics DRAM contract prices in the first quarter of 2024. TrendForce is closely monitoring this sector and has not observed any imminent signs of price drops. The current momentum in procurement is primarily driven by early stocking strategies employed by buyers. Given that graphics DRAM serves a niche market, it is crucial to monitor whether the sales energy of end-user electronic products can match this upward pace.

In the consumer DRAM segment, manufacturers are aggressively raising contract prices, prompting buyers to stockpile early and improving purchasing momentum. However, the first quarter coincides with the industry’s off-season, and weak end sales are expected to result in increased inventory levels due to buyers’ early stocking strategies. Manufacturers generally anticipate that in 2024, as HBM and DDR5 penetration expands each quarter, low-margin DDR4 capacity will be crowded out, leading to shortages. Consequently, DDR4 contract prices are expected to outpace DDR3 in the first quarter by 10-15%. Taiwanese manufacturers continue to supply DDR3, and with generally high inventory levels, its contract price increase is estimated at 8-13% for the first quarter of 2024.

Technology Explained

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DDR3: DDR3 (double data rate 3) is a type of computer transfer technology that is commonly used in modern computers. It is the successor to the original DDR and DDR2 technologies used to communicate data between the main memory and the CPU (central processing unit). It works by allowing two sets of information to be sent per clock 'tick', which helps to boost overall speed and efficiency. With DDR3, the computer industry has seen a significant increase in speed and performance. DDR3 is used in a variety of computer applications, from gaming to intense data processing and artificial intelligence tasks. It is used in PCs, laptops, and Macs, as well as in tablet technologies like the iPad. It also helps to provide better video streaming and signal data processing in networking. DDR3 is an essential and versatile technology in the modern computer industry.

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DDR4: DDR4 is a generation of Double Data Rate (DDR) dynamic random access memory (RAM) technology. It is a type of RAM that utilizes a higher clock frequency and is more power-efficient than its predecessors. As a result, it is capable of processing data more quickly than other RAM in the computer industry. Its increased speed and power efficiency are beneficial for applications such as gaming, rendering, and machine learning. It is designed for high-performance computing and enables faster access to stored information, resulting in better overall performance for the user. Furthermore, because of its low voltage requirements it requires less power consumption, making it an attractive option for many computer systems. DDR4 is set to become the primary RAM in most computer systems as the industry transitions away from its predecessors.

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DDR5: DDR5 (Double Data Rate 5) is the next generation of memory technology for the computer industry. It is a modern day improvement on earlier DDR technologies, with faster speeds, greater bandwidth and higher capacities. DDR5 enables higher resolution, seamless gaming experiences and faster data transfer rates, making it an ideal choice for high-performance computing and 4K gaming. With its greater RAM compatibility, DDR5 provides faster buffering times and raised clock speeds, giving users an improved overall work system. DDR5 is also optimized for multi-tasking, allowing users to multitask without experiencing a significant drop in performance, increasing the productivity of digital tasks. As an ever-evolving technology, DDR5 is paving the way for the computer industry into a new and powerful era.

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GDDR6: GDDR6 stands for Graphics Double Data Rate 6th generation memory. It is a high performance memory used in graphics cards and graphics processing units (GPUs), specifically targeting gaming, AI and deep learning-related applications. GDDR6 achieves higher bandwidth than previous generations, allowing faster and smoother gaming experience for users. It is also more power efficient, resulting in lower energy consumption overall. The improved power efficiency makes it adaptable to today's needs of thinner laptops and ultra-high definition gaming laptops. Additionally, GDDR6 is used in storage solutions and advanced data center applications to help streamline large amounts of data at lightning-fast speeds.