The ongoing trade dispute between the world's largest economies is exacerbating the problems with DRAM supply to the point that memory printing might become a loss-making activity.
DRAMeXchange, a division of analyst firm TrendForce that tracks memory pricing, has just revised its projections, expecting that prices will go down by up to 15 per cent in the third quarter of the year, and another 10 per cent in the fourth.
It previously predicted prices would shrink by 10 per cent in Q3, and by up to 5 per cent in Q4.
This builds upon an extremely challenging start to the year: in March, the firm warned that the prices of DRAM silicon experienced their largest decline in almost eight years, with costs crashing by nearly 30 per cent.
This means there's a chance that this year, prices will actually dip below suppliers' fully loaded manufacturing costs.
DRAMeXchange said the revision was primarily down to Huawei, which is likely to face considerable obstacles in shipping smartphones and servers to certain markets as a result of Trump's policies, at least for a few quarters.
"A heated US-China trade war may send demand in the second half of this year into quick-freeze, with the increasingly looming uncertainty compelling data centres to make reductions to capex," the firm said.
Memory oversupply issues started at the end of 2018, with low demand for consumer devices, increasing output from heretofore unknown Chinese vendors, and a lack of low-end Intel CPUs. This drove memory prices into the ground and pushed major suppliers like Samsung, SK Hynix and Micron to scale down production, eroding their revenues.
Such is the nature of components, DRAMeXchange said DRAM prices have a chance to see a rebound in 2020 "due to prices hitting bottom, limited supply bit growth and other factors".
Meanwhile, Huawei is busy working on contingency plans. According to Bloomberg, the company is getting ready for a protracted trade war and has tasked as many as 10,000 developers and engineers with tweaking its products and eliminating its reliance on components shipped from the US. ®