In 2023, there was a severe overcapacity of inventory and the memory market suffered a more severe price decline compared to other components. Its prices continued to slide for several months before consolidating at the bottom, finally bottoming out in the third and fourth quarters of 2023. Most memory manufacturers took strategic production cuts during this period to curb excessive flows.
Manufacturers' production cuts and the popularity of AI somewhat curbed the downward cycle of DRAM and NAND-Flash from reaching all-time lows. Since the end of last year, there have been several price increases for mainstream products of memory chips, which have substantially improved the performance of the manufacturers concerned.2024 In the first quarter, major memory manufacturers have announced price increases, including Micron, Samsung, and Western Digital, among others. Ongoing production cuts have helped manufacturers control supply, which has led to higher prices.
Currently, the price of memory chips continues to rise, according to TrendForce Tiburon's market forecast, the DRAM contract price quarterly increase in the second quarter will be upwardly adjusted to 13%-18%; NAND Flash contract price quarterly increase synchronization rose to about 15%-20%. Driven by the popularity of AI technology and the surge in demand for terminal equipment, the market is expected to expand further, overseas memory manufacturers such as Armor, Samsung, SK Hynix, Micron, etc., the performance of the obvious positive changes.
However, industry insiders believe that sustained price increases do not mean that the market has seen a greater improvement, the main driving force is still manufacturers to tighten supply, the main areas of growth are mainly consumer electronics, industrial control, AI language big model, automotive smart technology, etc., the rest of the market remains lukewarm, no obvious signs of growth.
Figure: memory chip prices continue to rise
Rising memory chip prices may intensify market competition. Manufacturers need to pay more attention to cost control, technological innovation and changes in market demand to meet the challenges posed by rising prices. For manufacturers of cell phones, laptops and other electronic products, production costs will increase accordingly as the price of NAND memory chips rises.
Micron raised the prices of its products by 20% in the second quarter due to the Taiwan earthquake, which Micron believes damaged its advanced process technology, and its server DRAM prices rose more than its mobile DRAM. TrendForce reported that its mobile DRAMs in general grew 3%-8% YoY.
On the other hand, Western Digital said its SSD and HDD product lines are experiencing shortages and making price adjustments. In addition, industry insiders have also indicated that Samsung may increase enterprise SSD prices by 20-25% in 2024 to reverse the downward trend in 2023.
Overall, TrendForce believes that the momentum of inventory replenishment that drove large purchases earlier this year is expected to weaken, and DRAM contract prices will converge to a 3%-8% gain against the backdrop of a lackluster demand outlook and sharp price increases.
NAND-Flash will see high growth of 13%-18%, as market conditions and supplier inventory reductions influence purchasing trends. At this stage of the recovery, memory is still uncharted territory. Demand for consumer electronics is not expected to return to normal levels until at least the second half of this fiscal year. Additionally, with artificial intelligence still leading the way and demand surging, HDDs and SSDs will likely continue to see price increases and longer lead times.
