As the COVID-19 pandemic continues to accelerate and cause damage to the global economy and consumers’ purchasing power...
According to the latest investigations by the WitsView research division of TrendForce, despite the impact from the COVID-19 pandemic...
TrendForce indicates that there has been an influx of downgraded 1Xnm chips in the spot market at rock-bottom prices due to product returns. Although downgraded chips are currently still being returned, memory module makers and channel brokers have become more willing to raise their inventories. With the stockpile of downgraded 1Xnm chips being quickly digested, spot prices have also started rising.
In terms of the overall supply and demand situation, the 4Q19 DRAM market is still slightly skewed toward oversupply despite five quarters of inventory adjustment. Furthermore, although the overall 1Q20 DRAM demand will be stronger than usual despite seasonality, the reversal of oversupply will occur no earlier than in mid-2020. However, DRAM price upturns historically tend to precede reversals in supply/demand dynamics; as a result, TrendForce previously stated that DRAM ASP could start to rally by the beginning of 2Q20.
However, the sharp hike in spot quotes this week has altered the outlook for next year due to its potential to galvanize demand and affect contract negotiations. The effect of this development will be especially felt in the server DRAM segment because issues with the 1Xnm production across the DRAM industry have had a disruptive effect on the supply of memory products as a whole.
TrendForce’s latest updates to its 1Q20 price forecast are as follows: contract prices of PC DRAM, specialty DRAM, and mobile DRAM products will experience minor QoQ drops, while contract prices of server DRAM products will register a QoQ increase. With the anticipated cyclical upturn in prices first occurring in the server DRAM segment, the overall DRAM ASP may also hold steady at about the same level as in 4Q19.
TrendForce’s observation of the DRAM market finds an increase in quantities of server DRAM traded and an easing of the price decline. These trends indicate that server OEMs are becoming more proactive in building up their DRAM inventories. Looking ahead to 1Q20, because of existing instabilities in the supply of products built on 1Xnm processes, as well as fairly robust short-term demands, server DRAM ASP is expected to rally, with a 5% increase QoQ.
Besides the latest revision to the price forecast of server DRAM, TrendForce has also corrected upward the price forecast of Graphics DRAM. The inventory level of GDDR5 products on the supply side has come down to a relatively low level after a period of adjustments. Furthermore, GPU makers are shifting their demand to next-generation GDDR6 products. With the demand side anticipating rising quotes in the future, contract prices of Graphics DRAM products are projected to post a minor QoQ increase.
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