Semiconductor Prices Overcome COVID-19, Rising for 3 Consecutive Months

[Asia Economy Reporter Changhwan Lee] While major industries are being hit by the spread of the novel coronavirus infection (COVID-19), memory semiconductors seem to be avoiding the recession. Memory semiconductor prices have continued to rise for three consecutive months.

According to market research firm DRAMeXchange on the 1st, the fixed transaction price of DDR4 8-gigabit (Gb) DRAM products, mainly used in PCs, recorded an average of $2.94 in March, up 2.1% compared to February.

The fixed price of DDR4 8Gb DRAM rebounded to $2.84 in January for the first time in 13 months, then recorded $2.88 in February, continuing the upward trend for three consecutive months through March. The rate of increase also expanded from the 1% range in February to the 2% range in March.

The demand for server DRAM significantly increased, leading the overall rise in DRAM prices. The server DRAM price increase rate in March was 5.2%, continuing the upward trend following 2.1% in January and 6.1% in February.

PC DRAM also maintained its upward trend. The PC DRAM price increase in March was 2.0%, rising from 0.9% in January and 1.3% in February.

The increase in DRAM demand is paradoxically attributed to COVID-19. As the virus spread, demand for remote work and online activities increased, and semiconductor inventory accumulation demand from server and PC companies also rose. Supply is limited, so prices increased as demand grew.

DRAMeXchange expects this trend to continue for the time being. DRAMeXchange stated, "Despite the spread of COVID-19 in North America and Europe, memory semiconductor inventory accumulation demand has continued," and forecasted, "The price increase of DRAM in April will be even greater."

Recently, as the COVID-19 spread in China has subsided, local factory operating rates are recovering to normal levels, and with the increase in remote work and online lectures, server semiconductor demand is also rising, leading to an analysis that the upward trend will continue into the second quarter.

DRAM fixed prices are expected to rise by about 10-20% in the second quarter. Hana Financial Investment explained that this is because increased cloud demand in the Chinese market and expanded remote work and remote education due to regional lockdowns are triggering demand for PCs and laptops.

The rise in DRAM prices benefits the performance of Korean semiconductor companies such as Samsung Electronics and SK Hynix. The financial investment industry expects semiconductor companies' performance to remain solid this year despite COVID-19.

However, concerns arise when looking at the second half of the year. Smartphone production is expected to significantly decrease this year due to COVID-19, which may lead to a decline in semiconductor demand.