DRAM
As expected, all top DRAM vendors have cut production in order to reach a healthier inventory level earlier.
However, demand has decreased from the non-AI server segment, worsening the situation.
After the announcement of further production cuts, the sentiment is different between the channel market and contract market.
The channel market expects prices to reach the bottom, but most contract customers behaved no significant changes.
However, all customers may increase their inventory at different levels after the end of 2Q23 to avoid possible price hikes in 2H23.
There is a further reduction in DRAM demand.
Server build volume may decrease compared to last year due to enterprise Capex cuts and a weak consumer market, which has led to a conservative perspective on server demand.
In addition, the high BOM cost of Intel SPR platform is a headwind to penetrating the server market. The RDIMM5 penetration rate may be lower than expected.
Smartphone vendors’ projections for 2H23 are not as good as before due to weak worldwide economic conditions.
However, the demand for high-density LPD5x has improved recently. The content would increase more than originally projected due to attractive LPDRAM pricing, leading to a stronger rebound in the next solid upturn.
Regarding contract prices, the second-quarter ASP decline is quite significant.
Customers are seeking low prices despite suppliers’ production adjustments.
The PC and server contract price may be lower than the current estimation as most deals are not final yet.
As mentioned, the channel market reacted differently from the contract market after additional DRAM capacity cuts.
The spot price is relatively stable after the announcement. Certain module houses, agents, and traders tend to raise the module price, but they have not been successful so far.
DRAM suppliers have an intention to raise commodity DRAM prices in the spot market.
However, it may not be easy to succeed due to no solid demand as backup.
That means the spot price has a chance to rebound if demand improves in late 2Q23 or 3Q23. The contract price could be stable or declining less once spot market rebounded.
This month, in the spot market,
16G DDR4 x8 original brand component declined low single digit.
16G DDR4 x8 ETT/UTT grade component relatively flat.
8G DDR4 x8 original brand component declined mid single digit.
8G DDR4 x8 ETT/UTT grade component declined mid to high single digit.
4G DDR3 x16 original brand component relatively flat.
4G DDR3 x16 ETT/UTT grade component declined mid single digit.
NAND
NAND contract prices declined more than anticipated in 2Q23.
The low price of high-density value client SSDs would stimulate higher content growth.
Smartphone vendors are also promoting high-density UFS to boost sales.
However, smartphone vendors’ shipment projection for 2H23 are not as optimistic as before due to the weak global economic situation, leading to continuous order cuts in the smartphone supply chain.
NAND suppliers have further cut their production due to the weak demand, but the existing production cuts are still insufficient to lower their inventory to normal levels this year.
The NAND price is nearing the cash cost, and it could be a good timing to expect NAND flash vendors’ consolidation.
The consolidation might happen soon.
It might not cause any loss of capacity or supply decreasing.
However, this might change market sentiment for both supply side and demand side.
We may expect the spot price to become more stable or rebound after that.