DRAM Spot Prices Falling to the $2 Range, Have They Peaked?

[Asia Economy Reporter Changhwan Lee] Recently, as the spot prices of semiconductor DRAM continue to decline, there are forecasts that the growth rate of memory semiconductor prices in the second half of the year will also slow down.

According to market research firm DRAMeXchange on the 14th, the spot price of DDR4 8-gigabit (Gb) DRAM products, mainly used in PCs, recorded $2.97 as of the 12th.

The spot price of DDR4 8Gb DRAM has been declining for two consecutive months after peaking at $3.60 in early April. It is analyzed that the recent spread of the novel coronavirus infection (COVID-19) in North America and Europe, the largest markets for electronic products, has recently been reflected in semiconductor spot prices.

The DRAM spot price is currently below the fixed price. The fixed price of DDR4 8Gb DRAM in May was $3.31, continuing an upward trend for five consecutive months, and the spot price had been significantly higher.

However, as the spot price, which was traded higher than the fixed price, recently fell below the fixed price, there is a possibility that the fixed price will also decline in the future. The increase rate of DRAM fixed prices was 11.9% month-on-month in April but slowed significantly to less than 1% last month. Since Korean companies trade semiconductors at fixed prices, the trend of fixed prices is more important than spot prices.

DRAMeXchange stated, "Despite efforts by DRAM suppliers to reduce inventory, the gap between fixed transaction prices and spot prices may continue to widen," and added, "If this trend continues, the fixed transaction price of DRAM may decline in the third quarter."

As semiconductor prices show mixed trends, forecasts for the semiconductor market also vary. Some expect the semiconductor market to slow down in the third quarter. The Bank of Korea, in its Monetary and Credit Policy Report released on the 11th, forecasted, "Although there are both positive and negative aspects of the impact of COVID-19 spread on the semiconductor market, the negative impact is expected to be greater in the short term."

While the increase in server demand due to active non-face-to-face economic activities is positive, it is expected that the impact of a sharp decline in demand for durable consumer goods such as mobile phones and home appliances, which have a larger share of semiconductor demand due to COVID-19, will be greater.

NH Investment & Securities predicted that although DRAM prices, centered on server DRAM, rose in the first half of the year due to increased non-face-to-face demand caused by COVID-19, data center investments will partially decrease in the second half due to increased inventory.

However, it analyzed that the improvement in mobile demand, such as smartphones, which was extremely sluggish in the first half, could offset the decrease in server demand in the second half.