The average price decline of DRAM and NAND flash memory in 2Q23 may expand

As reported yesterday, Phison Electronics CEO Pua Khein-Seng stated in a recent conference that a further decline in NAND flash memory prices is now impossible, and if the market does not recover promptly, some suppliers may face bankruptcy. This directly reflects the current predicament of NAND flash memory suppliers, although the DRAM market is also far from prosperous. TrendForce previously predicted that the average price of NAND flash memory would fall by approximately 5% to 10% in the second quarter. Recently, TrendForce released another report stating that the decline in production by DRAM and NAND flash memory suppliers is not as rapid as the decrease in demand, causing the average price drop for some products in the second quarter to widen.

Regarding PC DRAM, as DDR4 memory stocks are ample, suppliers are attempting to reduce inventory, but due to weak market demand, transaction volumes have not increased, leading to an estimated decline of 15% to 20%. DDR5 memory, with a more balanced supply compared to DDR4 memory, is predicted to have a smaller average price drop.

In the Server DRAM sector, the continuous decline in server demand has resulted in increased DDR4 memory stock pressure, with the expected quarterly decline widening to 18% to 23%. DDR5 memory, affected by PMIC issues, has limited supply, causing the average price drop in the second quarter to shrink to 13% to 18%. However, as the proportion of DDR5 memory remains relatively low, its impact on price fluctuations is limited, with the overall Server DRAM average price drop for the second quarter estimated to expand to 15% to 20%.

For Mobile DRAM, although smartphone manufacturers have completed inventory adjustments, and purchasing intentions are higher than last year, suppliers’ inventories remain high, thus increasing their willingness to offer discounts. Some buyers are currently combining their third-quarter demand with the second quarter to increase bargaining power. Due to various factors, the estimated average price drop for Mobile DRAM in the second quarter will expand to 13% to 18%.

The primary reason for the decline in NAND flash memory prices is still an oversupply in the market, with Enterprise SSD and UFS declines widening, and both types of products accounting for approximately 50% of the total NAND flash memory consumption.

The continuous decline in server demand not only affects Server DRAM prices but also impacts Enterprise SSD prices. In the second quarter, Enterprise SSD inventory pressure is expected to increase, with the average price drop widening to 10% to 15%. However, it is anticipated that with the release of new platforms and ongoing inventory reduction, Enterprise SSD demand may see significant growth in the second half of the year.

The UFS situation is similar to Mobile DRAM, with smartphone manufacturers displaying increased purchasing intentions. Still, as buyers combine their third-quarter demand with the second quarter to enhance bargaining power and suppliers exhibit a strong desire to reduce inventory, the average UFS price drop in the second quarter is expected to widen to 10% to 15%.