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DDR5 Pricing Could Drop Next Quarter, but Don't Get Your Hopes Up

Trident Z5
(Image credit: G.Skill)

The launch of Intel's 12th Generation Alder Lake processors ushered in the era of DDR5 memory. However, the launch of next-generation memory comes with an inherent price premium over DDR4, which the chip shortage has only exacerbated. With this in mind, TrendForce released its latest analysis of the DRAM market, and things look interesting for Q1 2022.

While notebook shipments are expected to end the final quarter of 2021 ahead of projections, the usual Q1 decline will be in full effect at the start of the year. At the same time, PC OEMs are continuously altering their inventory levels of PC DRAM to address both laptop and desktop demand. As a result, due to the delicate balance of customer demand, cyclical downturn, and DRAM suppliers chasing profits, TrendForce projects that PC DRAM prices (DDR4) could drop 5 to 10 percent during Q1 2022. On the other hand, DDR5 prices are set for a slightly lower decrease of 3 to 8 percent.

Unfortunately, the bad news for those looking to hop on the DDR5 bandwagon is that the modules' average selling price (ASP) will not budge much. TrendForce attributes this to a "low penetration rate" given Alder Lake's relatively short time on the market. The first Alder Lake processors didn't arrive until early November, and customers can currently choose to use either DDR4- or DDR5-based motherboards.

Once suppliers begin ramping DDR5 production and Intel starts to flood the market with additional Alder Lake processors, the situation should change. Likewise, we could hit a tipping point once AMD Zen 4 processors arrive to further nudge the industry toward mainstreaming DDR5 modules. Samsung previously stated that it believed that DDR5 will become the favored choice for PC systems by 2023, or 2024 at the latest [PDF].

Regarding the server market, it's forecast that prices may decrease between 8 to 10 percent during Q1 2022 — the highest levels expected for the 2022 calendar year. "DRAM suppliers' inventory of server DRAM, on the other hand, has been gradually rising in 1H21 owing to decreased demand," TrendForce writes. "Furthermore, certain suppliers have ramped up their wafer input for server DRAM products, leading to an increased production."

As for graphics DRAM, suppliers are reportedly slowly shifting from 8Gb to 16Gb chips, with Micron leading the way. Linked with that, 8Gb chip pricing has been on the rise recently due to their prevalence in mainstream graphics cards. "Prices of graphics DRAM products on the whole will be fairly constrained from declining further due to the rise in spot prices, the aforementioned demand turnaround, and Micron's decision to scale back production for 8Gb chips," the market research firm concludes. As a result, graphics DRAM prices are expected to stay mostly flat in Q1 2022.

Brandon Hill is a senior editor at Tom's Hardware. He has written about PC and Mac tech since the late 1990s with bylines at AnandTech, DailyTech, and Hot Hardware. When he is not consuming copious amounts of tech news, he can be found enjoying the NC mountains or the beach with his wife and two sons.