[Asia Economy Reporter Jeong Hyunjin] Global DRAM spot prices have surpassed the $4 mark for the first time in over two years. The sharp rise in DRAM prices, driven by increased demand since the end of last year, has ignited expectations that the semiconductor supercycle will begin this year. Semiconductor companies such as Samsung Electronics and SK Hynix, whose performance depends heavily on product prices, are increasingly optimistic about the recovery of the industry.
According to global market research firm DRAMeXchange on the 23rd, the spot price of DRAM used in PCs (based on DDR4 8Gb) rose 2.13% from the previous day to an average of $4.075. Since spot prices serve as a leading indicator of the memory semiconductor market, fixed contract prices directly linked to semiconductor companies' earnings are also expected to rise soon. The fixed price for PC DRAM averaged $3 last month, marking a rebound after eight months.
The average spot price of PC DRAM exceeding $4 is the first time in 22 months since April 25, 2019 ($4.032). At that time, due to the economic downturn and increased uncertainty caused by the US-China trade dispute, server investments were delayed, and PC DRAM prices fell to the $2 level. After recovering to the $3 level in early last year, PC DRAM prices dropped back to the $2 range before surging sharply from December of the same year due to a rapid increase in demand. Prices have risen 17.8% so far this year.
The sharp rise in DRAM prices is attributed to the surge in demand caused by social changes such as the ‘stay-at-home’ culture brought about by the COVID-19 pandemic. TrendForce analyzed last month that "DRAM contract prices officially entered an upward trend from January as suppliers' inventory decreased and customers' strong demand coincided." The industry also forecasts an even faster price increase as PC manufacturers begin to stockpile DRAM in preparation for the peak season.
There is also analysis that the NAND flash memory market will recover starting in the second quarter. Analyst Park Seongsun of Cape Investment & Securities said, "SSD prices are expected to rise due to increased demand for solid-state drives (SSD) and a shortage of SSD controllers," adding, "The market recovery is progressing faster than initially expected." Concerns over supply constraints caused by the suspension of Samsung Electronics' semiconductor plant in Austin, USA, are also likely to be a factor driving price increases.
With the expected price increases of their main products, Samsung Electronics and SK Hynix are all smiles. Both companies have an overwhelmingly large share of memory semiconductors in their semiconductor sales, so price increases act as a positive factor for their earnings. As a result, SK Hynix's market capitalization surpassed 100 trillion won during trading yesterday. Market research firm IC Insights forecasts that sales related to DRAM and NAND flash will increase by 18% and 17%, respectively, this year, ranking first or second in semiconductor sector growth rates for the year.
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