Artificial intelligence has helped boost memory sales after the dramatic bullwhip from shortage to glut last year. While its aid has supported sales of high-bandwidth memory (HBM) and solid-state drives (SSDs), low demand across consumer electronics has kept complete recovery out of reach.
In a recent report by TrendForce, DRAM spot prices are suffering from downward pressure, especially across DDR4 and DDR5, with the former seeing the most. TrendForce cites an underwhelming peak season as the primary reason for the unfavorable price conditions.
TrendForce says that spot sellers are still under pressure to offload inventory, leading to a slight sell-off. That said, TrendForce notes that inventory levels are not as excessively high as they were, which means that selling pressure will remain manageable despite market conditions. Unfortunately, there is no sign of stabilization in spot prices, especially now that Samsung Electronics has decided to release reball DDR5 chips stripped from decommissioned models at lower prices.
The plentiful supply of reball chips is exerting even greater downward pressure on DDR4 chips. Similarly, ZDNet Korea states that Chinese manufacturers, such as Changxin Memory Technologies (CXMT), are aggressively expanding production, which could “negatively affect profitability in traditional DRAM.”
Samsung Electronics and SK Hynix are monitoring the situation, as aggressive DRAM expansion by CXMT and others could negatively impact sales and profits for Korean memory-makers. While low, CXMT’s 5% hold on the market share could influence prices.
Similarly, NAND flash spot prices are also feeling pressure from the market. Due to sustained sluggishness among consumer products and lackluster transactions in client SSDs, embedded products, and memory cards, some manufacturers are pessimistic about market stabilization occurring in the remaining quarters 2024. Spot prices have continuously dropped by a small margin due to ongoing poor market conditions.
According to TrendForce, analysts believe this current market enervation will “persist until 1H25,” meaning that the market has a long way to go in recovering despite AI hype. Meanwhile, while the overall traditional market struggles to reach stabilization, AI continues to see explosive demand across its various subgenres.