DRAM price to drop 20% in first quarter of 2019

DRAM price is expected to drop nearly 20 percent in the first quarter of 2019 and the most decline will be in the server DRAM segment.
Samsung DRAM
The growth of the industry’s bit output is one of the major problems in the global DRAM market. In addition, the earlier arrival of the traditional slow season in Q4 2018 has resulted in increasing inventory level earlier than expected.

Micron has noticed the biggest drop in prices in Q4 2018, which lowered its inventory level. South Korean-based suppliers experienced the lowest price fall and lower shipments, which may lead to considerable inventory level throughout Q1 2019.

The supply bit growth will remain higher than sales bit growth, resulting into increase in inventory level and drop in the prices. This price trend may last for more than four quarters from Q4 2018.

DRAM suppliers have scaled back their Capex for 2019 to stabilize the prices and moderate the oversupply.

Module makers were unable to generate profits from the price differences of memory chips at the start of 2018 because DRAM prices had become high. Module makers relied on the additional processing work for improving profit.

The average price of 8GB modules is staying roughly at $60 and 4GB modules is around $30, significantly lower than previous months.

DRAM suppliers and OEMs have earlier decided to keep the price of 8GB modules for the first-quarter contracts at around $55, showing a 10 percent drop in the average contract price of 8GB modules.

The latest IDC report said server market revenue rose 43.7 percent to $22.5 billion and server shipments increased 20.5 percent to 2.9 million units during the second quarter of 2018.

Volume server revenue increased 42.7 percent to $18.4 billion, midrange server revenue grew 63.0 percent to $2.5 billion and high-end systems grew 30.4 percent to $1.7 billion.