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DRAM prices to retreat in 4Q21 after strong gains

DRAM ASPs soared 41% through the first eight months of 2021, rising from US$3.37 in January to US$4.77 in August. ASPs slipped 3% to US$4.62 in September, still a 37% surge compared to the beginning of 2021, according to IC Insights.

Such a strong price increase and market rebound were expected in 2020 following a very difficult year in 2019 when DRAM ASPs fell 44%, IC Insights said. But major challenges - chief among them, the global COVID-19 pandemic - clouded and disrupted the market for DRAM in 2020.

In early 2021, vaccines were approved and were widely distributed in many developed countries. This allowed several national/regional economies to begin recovering to pre-pandemic levels. Throughout the first three quarters of the year, DRAM suppliers scrambled to meet pent-up demand from all end-use segments. Lead times stretched as buyers, eager to have enough chips in stock for their systems, bought early and ordered extra, adding more fuel to the price rally, IC Insights indicated.

Specifically, PC and server manufacturers purchased large quantities of DRAM in the first half of 2021 to help alleviate potential manufacturing and shipping delays later in the year. They are expected to curtail their high level of DRAM purchases in the fourth quarter of 2021 in order to burn through existing inventory. PC and server DRAM prices are expected to slip 0 5% in the fourth quarter, IC Insights said.

In light of an uncertain holiday buying season and lower mobile DRAM prices that are anticipated in 2022, smartphone makers remain cautious about purchasing too much DRAM in the fourth quarter of 2021 and have opted instead to focus on reducing their inventory supplies. IC Insights believes this will keep prices for mobile DRAM flat in the fourth quarter.

In some cases, shortages of other IC components have impacted DRAM pricing. For example, some of the strongest demand for graphics DRAM originates from graphics cards used in notebook computers. In the final quarter of this year, severe shortages of driver ICs, power management ICs, and other peripheral circuitry are expected to limit graphics card production, which has lessened procurement activity for graphics DRAM. As a result, the price of graphics DRAM is also expected to be down 0-5% in the fourth quarter of 2021, IC Insights said.

It is worth noting that after falling to a three-year low of US$14.8 billion in 1Q20, the DRAM market registered growth in each quarter through the coronavirus outbreak year of 2020 and the first three quarters of 2021. DRAM sales for the third quarter of 2021 came to US$26 billion, hitting their highest quarterly levels since the third quarter of 2018 when sales were an all-time high of US$28.2 billion, according to IC Insights.

By DIGITIMES

Link:https://www.digitimes.com/news/a20211112PR200.html?mod=3&q=IC

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