Market research firm IHS said that oversupply in the DRAM market will be sending prices for memory chips into a steep decline in Q3 and Q4 of this year.
“Contrary to typical seasonal patterns in which prices are very soft during the second quarter, that period this year saw relatively flat, unchanged DRAM pricing compared to the first quarter,” said Mike Howard, principal analyst, DRAM and memory, at IHS. “However, companies did not capitalize on the healthy pricing levels to increase shipments in the second quarter—which, in retrospect, may have been the best time to do so.”
While the DRAM industry is used to pricing challenges and cut-throat competition, the current environment is amplified by bloated inventory and challenges in transitioning to new process technologies, IHS said. “The third quarter is shaping up to be pretty bloody for DRAM makers,” Howard noted. “The combination of inventory reductions by DRAM makers and more bits coming out of the fabs is resulting in a very soft pricing environment.”
IHS expects a 15.9 percent shipment increase in shipments in the third quarter.
The market research firm believes that cutbacks in production as well as DRAM manufacturers shifting their focus to flash memory may help stabilize DRAM prices again. However, OEMs and consumers should be able to get their hands on much cheaper DRAM in the second half of the year for now.