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Oversupply issues may cause DRAM prices to fall as much as 42% this year

By Wong Chung Wee - on 24 Jul 2019, 10:54am

Oversupply issues may cause DRAM prices to fall as much as 42% this year

An new mainland China semiconductor fabrication plan of ChangXin Memory Technologies, Inc.. (Image source: CXMT)

According to a Gartner report, DRAM prices may fall as much as 42% this year. This may be brought on by a “demand-driven oversupply” in the DRAM market. This glut of DRAM supply is expected to extend through Q2 of 2020.

The report states the decline is due to “signs of a slower demand recovery at the hyperscale vendors and the increasing inventory levels of DRAM vendors.” Gartner also reported that the global NAND market has been in oversupply since Q1 2018, and this situation has been exacerbated as the “near-term demand for NAND is weaker than expected.”

Factors on NAND supply and demand include the ongoing trade dispute between the United States and China that affect trade rates. The US trade restrictions on Chinese businesses due to security concerns also will have long term impact on “semiconductor supply and demand.” Mainland China’s domestic semiconductor production is speculated to increase as new fabs go live for domestic consumption. In addition, there’s also the negative effect from the reduced growth in smartphones, servers, and PCs.

Ben Lee, senior principal research analyst at Gartner says,

“The semiconductor market is being impacted by a number of factors. A weaker pricing environment for memory and some other chips types combined with the U.S.-China trade dispute and lower growth in major applications, including smartphones, servers and PCs, is driving the global semiconductor market to its lowest growth since 2009. Semiconductor product managers should review production and investment plans to protect themselves from this weaker market.”

The observations of the Gartner report may not pan out as expected; however, lower DRAM prices will definitely be welcomed by end consumers. Last of all, the report also forecasts the decline of worldwide semiconductor revenue by 9.6% to a total of US$429 billion this year. In 2018, the revenue was totaled at US$475 billion.

Source: Gartner

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