Will DRAM Prices Rebound Faster Due to Micron Power Outage? (Comprehensive)

[Asia Economy Reporter Changhwan Lee] As a recent power outage occurred at Micron's Taiwan factory, the third-largest player in the DRAM market, there are expectations that the rebound in semiconductor prices could accelerate. Recently, spot prices for DRAM have successfully rebounded after a month and a half, leading to forecasts of continued price increases.

According to industry sources on the 4th, Micron's Taiwan MTTW plant reportedly halted operations for over an hour due to a power outage the previous afternoon. Although Micron has not made an official announcement, the industry estimates significant damage.

The fab's production capacity is about 125,000 wafers per month, accounting for approximately 8.8% of global DRAM production. There are concerns that this outage could lead to a shortage in global DRAM supply going forward.

Daishin Securities stated, "We initially projected the start of the DRAM price increase cycle to be in the second quarter of next year, but due to this power outage, demand to secure safety stock has emerged, which is expected to accelerate the entry into the upcycle."

Recent Successful Rebound in Semiconductor Spot Prices Raises Future Expectations

The recent upward trend in DRAM prices also heightens expectations for future price increases.

According to market research firm DRAMeXchange, the spot price of DRAM (DDR4 8Gb) was $2.82 the previous day, up 1.5% from the previous trading day. DRAM spot prices have risen for two consecutive days, increasing by 0.14% on the 2nd.

This is the first price increase in about a month and a half since mid-October. DRAM prices had been weak throughout the second half of the year as inventory accumulated among major buyers such as server companies. However, in September, semiconductor prices temporarily rose due to concentrated purchases by Huawei, which was stockpiling semiconductors amid U.S. sanctions.

The fixed price of DRAM, which serves as a benchmark for semiconductor transactions by Korean companies, has also stopped declining. Last month, the average fixed price for DDR4 8Gb DRAM was $2.85, the same as in October. The fixed price had maintained $3.13 for three consecutive months until September after falling 5.44% in July compared to the previous month, before plunging into the $2 range in October.

With DRAM prices no longer falling and showing signs of rebound, forecasts suggest that price increases will become more pronounced early next year. DRAMeXchange stated that a full-scale DRAM price increase is expected to begin in the second quarter of next year, with double-digit price growth anticipated each quarter.

Hyunwoo Do, a researcher at NH Investment & Securities, explained, "Considering that spot prices usually lead fixed prices by about three months, there is high expectation for improved DRAM supply and demand next year."

Although semiconductor prices remain weak, the clear improvement in demand also supports the outlook for rising semiconductor prices. The World Semiconductor Trade Statistics (WSTS) forecasts that global semiconductor market sales will increase by 8.4% next year to $469.43 billion (approximately 520 trillion KRW) compared to this year.

Memory semiconductors are also predicted to grow by 13.3% compared to this year. Samsung Electronics recently stated at an investor forum that "DRAM demand is expected to grow 15-20% annually through 2024, and NAND by 30-35%."

Accordingly, there are expectations that profits for Korean semiconductor companies such as Samsung Electronics and SK Hynix will improve significantly next year. An industry insider said, "Next year, various momentum factors such as increased untact demand, DDR5, and NAND high-layering exist that can boost semiconductor companies' performance," adding, "Some even believe that a semiconductor supercycle could return."