Thu, Oct 11, 2018 - Page 12 News List

Memory prices to take a dive of up to 30 percent next year, Trendforce says

By Lisa Wang  /  Staff reporter

Global memory prices are expected to fall between 15 percent and 30 percent annually next year due to overcapacity, lukewarm smartphone replacement demand and concern over the US-China trade war’s effect on server shipment growth, TrendForce Corp (集邦科技) said on Tuesday.

This follows an estimate of a 5 percent price drop for this quarter, breaking the DRAM industry’s nine-quarter-long supercycle, the Taipei-based market researcher said in a report.

“It is becoming harder and harder to stimulate smartphone replacement demand, given [the unattractive] features of new models,” the company said. “That should lead to sub-seasonal demand during the industry’s high season in the fourth quarter.”

A shortage of Intel Corp processors has also limited shipments of notebook computers, which has indirectly curtailed DRAM chip demand, it said.

In contrast to flagging chip demand, DRAM chip output would rise during the third and fourth quarters as the world’s major chipmakers migrate to 1X or 1Y process technologies, it said.

DRAM output would grow at an annual rate of 22 percent next year, despite chipmakers contemplating the idea of scaling down capital spending next year, or putting off new production plans, TrendForce said.

“Price declines for DRAM [chips] are mostly to be subject to changes in demand,” it said.

Key factors would be a growth in “server shipments and growth in the memory content of each smartphone, in particular,” it said.

There is a risk that the price of DRAM chips could decline more than estimates, if a severe correction occurs in the server and smartphone segments, it said.

NAND flash memory chips would see a more drastic price reduction of 25 percent to 30 percent next year, due to sluggish demand for consumer electronics, TrendForce said.

The escalating trade war between China and the US could further dampen the outlook for shipments of smartphones, notebook computers and tablets, the company said.

Server manufacturers face import tariffs of 10 percent when shipping their products to the US, which has prompted major suppliers to consider relocating their production sites, the researcher said in a separate report.

On the supply side, flash memorychip output is expected to grow at an average rate of 5 percent year-on-year this quarter, as the world’s major flash memorychip suppliers ramp up production, it said, adding that 3D flash memory chips should grow 20 percent year-on-year this quarter, at a much faster rate than other types of flash memory.

To control overcapacity, flash memorychip makers are likely to slash their capital spending for next year, Trendforce said.

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