D-RAM Winter Until Next Year... DDR5 Expectations Amid Price Drop Concerns

D-RAM Market Peaked in May, Decline Expected Until Next Year
Semiconductor Industry Hopes for High-Value DDR5 D-RAM Solution
Rapid Price Drop of DDR5 Also Draws Some Negative Evaluations

[Asia Economy Reporter Kim Pyeonghwa] As forecasts suggest that the global DRAM market downturn will continue until next year, the next-generation product 'Double Data Rate (DDR)5' is gaining attention. While there is hope that the commercialization of the highly profitable DDR5 could be an industry breakthrough, concerns are also emerging as DDR5 DRAM prices have recently been falling rapidly.

On the 23rd, market research firm IC Insights stated in a recent report that the DRAM market's upward trend from the second half of 2020 until May this year has come to an end, forecasting a decline until early next year. The expected DRAM prices for the second half of the year are also on a downward trend. Market research firm TrendForce predicted that DRAM prices could fall by up to 15% and 18% in the third and fourth quarters, respectively, compared to the previous quarter.

The domestic semiconductor industry, which accounts for over 70% of the global DRAM market, is increasingly concerned. Samsung Electronics and SK Hynix point to DDR5 as one of the solutions to overcome the sluggish DRAM market conditions. DDR5 is the latest DRAM standard succeeding DDR4. With speeds more than twice as fast as DDR4 and 30% higher power efficiency, it is suitable for large-scale data processing. Market research firm Omdia predicts that the share of DDR5 DRAM in total DRAM shipments will increase from 4.7% this year to 40.5% by 2025. The semiconductor industry believes that the market will open up in earnest once companies like Intel and AMD release server CPUs supporting DDR5.

Since DDR5 DRAM is about 30% more profitable than DDR4, industry profits are expected to increase, but the rapid price decline is a variable. Taiwanese media Digitimes Asia forecasts a significant price drop for DDR5 DRAM this year. According to TrendForce, the decline in DDR5 DRAM prices compared to DDR4 is expected to be more pronounced in the third and fourth quarters. For PC DRAM, if DDR4-based prices fall by up to 18% in the third quarter, DDR5-based prices could drop by up to 20%. Especially for server DRAM, which the industry focuses on, if DDR4-based prices fall by up to 18% in the fourth quarter, DDR5-based prices could decrease by up to 30%.

While price declines could stimulate market demand, the rapid price drop influenced by external factors such as economic slowdown cannot be viewed positively alone. Kim Yangpaeng, a senior researcher at the Korea Institute for Industrial Economics and Trade, said, "Although DDR5 is proposed as a solution in a sluggish market, the reversal effect may not be significant," adding, "Since the global economy is frozen due to the economic slowdown, it will be difficult for the semiconductor market to recover until the world economy improves."