Diving DRAM prices are a problem not even AI can solve
Analysts just don't see digi-brains making a difference to dismal demand that's caused deep discounting
If you're in the market for a memory-optimized server or top-of-the-range workstation, the industry watchers at TrendForce have some good news.
The average selling price of DRAM is expected to tumble another 10-15 percent in the second quarter of 2023. That's on top of Q1's 20 percent slide. That outlook isn't so rosy for memory vendors like Micron, Samsung, and SK Hynix, which have struggled to overcome an inventory glut amid a slow down in semiconductor demand globally.
Making matters worse, TrendForce remains skeptical that demand will recover in 2023. "Prices will only rebound if there is a significant decrease in production," the analyst house wrote in a recent blog post.
Even AI has failed to make a considerable impact on demand
Several chipmakers have responded to this messy market by prioritizing the production of higher-priced, premium products, including DDR5 and LPDDR5, GDDR6, and high-bandwidth memory (HBM). This hardware is required by the latest generation of servers, GPUs, and AI accelerators.
However, it doesn't look like those investments will make much of a difference in the first half of 2023. Based on TrendForces numbers, none of these technologies are immune to the inventory glut driving down pricing.
Across the board, analysts predict another rough quarter for memory vendors. In the server space, DDR5 — which we'll note is only now making its way into systems thanks to the availability of compatible Intel and AMD CPUs — is actually expected to perform worse in Q2 — down 15-20 percent — compared to older more mature DDR4 modules. The same is true in the PC space, where DDR5 pricing is expected to slide 10-15 percent.
Korean media this week reported Samsung's chip biz could soon record a loss.
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Some are betting on a surge of AI adoption to speed their recovery. Compute clusters necessary to train popular large language models can be immense, sometimes spanning thousands of GPU nodes. And for companies like Micron, this represents an opportunity to ship a boatload of DDR5 and HBM memory.
On the company's Q2 earnings call this week, Micron's CEO Sanjay Mehrotra, expressed confidence that these trends would make a meaningful difference in the near term.
However, TrendForce isn't so optimistic. "Even AI has failed to make a considerable impact on demand," the analysts wrote.
One positive trend highlighted by the group is the impending shift to 16 gigabit GDDR6 modules later this year, as Samsung ends production of its eight gigabit chips. Heading into 2024, they expect SK hynix will be among the only companies still producing the older parts, which they say could help to stabilize pricing.
It's not just the DRAM market taking a beating either. Earlier this month, TrendForce reported a 20-25 percent fall in NAND flash prices, with enterprise SSDs seeing their prices slashed by as much as 28 percent.
TrendForce expects the major NAND producers to continue cutting production over the next quarter in a bid to curb overloaded inventories, but says pricing is still likely to slide over the next quarter.
While bad news for memory vendors, it sure looks like a great time to snag an SSD or DDR5 at a bargain price, and perhaps future-proof some hardware purchases by packing in a little extra memory and storage. ®