February 23, 2024

Expected price increase: DRAM and NAND more expensive due to production cuts.

In recent months, there has been a notable increase in DRAM and NAND chip prices on the spot market, signaling a positive change for the memory industry. This trend is proving advantageous for key players such as Samsung and Micron.

Factors Driving Price Rebound

DRAMExchange, a reliable memory chip price tracker, highlights a change of direction in the market. After a downward trajectory in 2022 and early 2023, prices reached their lowest point in July and August, before beginning a steady climb.

Impressive Price Gains in DRAM and NAND

Although prices have not yet fully returned to pre-crisis levels, the recent increase is notable. For example, the cost of two 4GB DDR8 chips has seen a 10% increase compared to August. Similarly, 512GB NAND chips now cost almost double what they did in July, while 256GB have seen a substantial 55% increase over the same period.

 2x8GB DDR4-3200512GB FTA256GB FTA

Root Cause: Global Economic Slowdown

The initial catalyst for the drastic price drop was the global economic slowdown caused by the COVID-19 pandemic. Reduced consumer spending resulted in a surplus of chips and subsequent price reductions. It is notable that the third quarter of 2022 was especially difficult for DRAM and NAND, with a 30% and 24% decline in global revenue, respectively.

Impact on Manufacturers

The consequences were severe for memory makers, with Samsung's profits nearly disappearing in the first quarter of 2023 and Micron reporting a loss exceeding $2 billion. In response, these companies significantly reduced production and the domino effect is now evident as supply constraints begin to drive prices higher. In addition, material shortages further exacerbate the situation, putting pressure to maintain lower supply and increase prices, as long as demand remains stable.

Immediate Effects on Consumer Products

The effects are already evident in the market. At the beginning of the year, mid-range 4.0TB PCIe 1 SSDs saw their prices drop to $35 or $40. However, the current situation paints a different picture, as consumers find it difficult to find any model under $50. Although a similar increase in RAM prices has not yet occurred, spot price dynamics suggest it could be on the horizon.

In conclusion, the recent increase in prices de DRAM y NAND marks a positive turn for the memory industry, signaling a recovery from the challenges posed by oversupply. As demand stabilizes and supply constraints persist, the memory market is poised for a more balanced and profitable future. This upward trajectory not only benefits the industry giants, but also sets a brighter outlook for the entire memory sector.

Source: Tom's Hardware

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