Memory chip market manifesting recovery: sources

Global DRAM contract prices remained unchanged for two consecutive months, and figures indicate that despite being a seasonally low period, memory chip prices will stabilize in the first quarter of 2020 as OEM firms are stacking up on inventory.

According to market research firm DRAMeXchange in December, 2019, the contract prices of DDR4 8Gb DRAM for PCs stood at US$2.81 for three consecutive months. The prices had remained mostly unchanged for the months of August and September before tumbling in October to their annual-lows.

In early November, however, average spot prices began to rise, with the 8Gb 2666Mbps price surging 9.5% to US$3.197 from 2.92.

OEM firms are now hoarding up on DRAM after predicting a shortage in the markets. “OEM companies appearto be conscious of a likely surge in DRAM prices this year,” said Kim Young-gun, an analyst at Mirae Asset Daewoo Securities.

DRAM supplier Samsung Electronics is now more reticent to cut prices, in contrast to November last year whenit was slashing prices to cut inventory. SK hynix and Micron have become less likely to negotiate pricesdue to falling inventories.

Local stock markets are also reflecting these predictions for DRAM market recovery, with brokerages raising the target price of Samsung Electronics, which has seen its 1X nm server DRAM inventory fall significantly to indicate price hikes.

“Given the co-relation between contract and spot prices, it is quite probable for the January spot prices to rise even more aggressively than December,” said Kim of Mirae Asset Daewoo. The power outage on Dec. 31 at Samsung’s fab plant also will affect the prices, he added.

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