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DRAM contract prices skyrocket amid semiconductor shortages
With the three dominant DRAM vendors (Samsung, SK Hynix and Micron) currently undercapacity, the memory market situation remains challenging. Taking advantage of the DRAM market entering its cyclical boom in Q1 2021, suppliers have significantly increased contract prices for specialty chips.
Interestingly, the rise in prices is especially strong for products belonging to the lower density segment and niche areas of application. The largest changes in contract prices are observed for specialized chips DDR2 and DDR3. DDR4 prices also climbed up due to the rise in the cost of DDR3. The average contract price of 4Gb DDR3, which is still the mainstream for specialized destinations, jumped 6.8% in February compared to January.
As for 2 Gb DDR3 chips, their average contract price increased by almost 9% in a month. Samsung Significantly Raises Prices for 4Gb DDR4 Chips in Response to Soaring DDR3 Costs. Contract prices for 4Gb DDR4 chips for specialized destinations increased by about 6% over the month, and the average cost of 8Gb DDR4 chips increased by about 4% over the month — these chips are primarily used as RAM for PCs and servers. It is worth mentioning that, despite a notable increase in February, prices for longer-term quarterly contracts with top clients remained stable.
Interestingly, DDR3 is now beginning to surpass DDR4 in terms of profitability, which is why DRAM vendors are changing their strategies. For example, Samsung has slowed down plans to transfer part of its DRAM production facilities to CMOS sensors. Likewise, SK Hynix stopped cutting DRAM production at the old M10 factory. Micron continues to cut DDR3 production, but pace of transition to more advanced regulations is slower than expected.
If we talk about smaller Taiwanese companies, then, for example, Nanya even transferred part of the 20nm and 30nm production capacity from the DDR4 release back to DDR3 printing. Winbond has recently focused on flash memory and its DRAM production capacity will remain limited until the completion of a new factory in Kaohsiung. Nevertheless, Winbond mainly produces DDR2 and DDR3 chips of small capacity (1 Gbit and 2 Gbit), and occupies a rather significant share in this area — thanks to this, it has now got the opportunity to significantly increase prices. Finally, PSMC has recently been focusing on printing logic chips, but thanks to the rise in prices for DDR3, it is going to return some of its production capacity back to the production of DRAM.
By the way, according to analysts from DigiTimes Research and Seeking Alpha, DRAM prices will rise throughout 2021.