DRAM prices rise over 20% in October

Average contract prices for PC DRAM memory rose over 20 per cent in October, with prices for 4gb modules coming to $17.50, compared with $14.50 in September, according to DRAMeXchange.

Samsung, Hynix and Micron are "turning away from aggressivley competing for market share through price reduction and capacity expansion," said DRAMeXhange’s Avril Wu as reported by Digitimes. Average prices for 4Gb DDR3 and DDR4 chips also rose 17 per cent and 24 per cent to $2.46 and $2.48 respectively in October.

"From the supply side, PC DRAM currently accounts for less than 20 per cent of the total output from the global DRAM industry because suppliers are focusing on the mobile and server DRAM markets," said Avril Wu, research manager of DRAMeXchange. "From the demand side, branded device makers have fairly low DRAM inventories while facing higher-than-expected demand in the busy season. Hence, prices of PC DRAM have risen sharply in the recent period.

"At the same time, changes have occurred in the relationship among the top three suppliers – Micron, SK Hynix and Samsung. Based on the oligopolistic market situation, the trio have opted for co-existence as the best way to maximize their own profitability. They therefore are turning away from aggressively competing for market share through price reduction and capacity expansion."

Those top three suppliers are set to keep their capital expenditure at around or lower than the levels of 2016 in 2017. The overall DRAM supply bit growth for 2017 will come below 20 per cent which would be an 8 year low. 

Wu said: "In a sense, there a strategic aspect behind the latest wave of DRAM price increase. In the short term, rising prices lift up margins for suppliers. In the long run, the barrier to keep Chinese competition out of the DRAM market is reinforced."

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