Almost a year ago, we wrote about the then-high DRAM prices and how DDR4 was substantially more expensive than it had been earlier in the PC cycle, regardless of clock rate. Nearly 12 months later, costs have come down substantially, but a new report suggests the three DRAM manufacturers still remaining will curb their production to prevent prices from falling as far as they might otherwise.
First, the good news. On January 30, 2017, we reported that the price of 16GB of DDR4-2400 (F4-2400C15D-16GVB) had jumped from $81 in 2016 to $196 in 2017. The good news is, pricing has come down substantially on that RAM kit, as shown by this graph from CamelCamelCamel:
According to a new report from Trendforce, memory manufacturers are slowing production to offset the steep decline in price. Contract prices fell 10 percent in Q4 2018 and Samsung, Hynix, and Micron are now on track to spend about $18B on DRAM capacity expansions in 2019. That’s a decrease of 10 percent compared to 2018. Samsung has canceled plans to expand its Pyeongtaek facility. Overall, it looks as though capacity will increase by ~20 percent next year, which is one of the smallest year-on-year manufacturing capacity increases on record. Micron is making even more drastic cuts, with only 15 percent expansion predicted. Don’t feel sorry for the DRAMurai, however — gross margins for Samsung and Hynix remain ~80 percent, while Micron is still above 60 percent. The three firms will attempt to avoid competing dramatically with each other on price by cutting capacity expansion rather than aggressively competing to gain market share at the expense of the other.
DRAMeXchange believes Q1 2019 demand will fall seasonally, but predicts no Q2 recovery yet “due to the looming trade war between China and the U.S.” Contract prices are predicted to fall by a further 15 percent in Q1 2019 and less than 10 percent in Q2 2019, with further declines of 5 percent per quarter “unless the demand is significantly improved.” A resolution of US-China trade tensions could materially change this forecast, however, and the decline in pricing should be good for enthusiasts who have held off on RAM capacity upgrades for PCs due to high pricing over the past 24 months.
It’s not clear how investigations into allegations of price-fixing and market collusion might impact prices going forward. China is conducting an investigation into alleged DRAM price fixing and the head of its anti-monopoly bureau, Wu Zenghou, claimed in November to have “massive evidence” of anticompetitive behavior but did not share specifics past this. The good news is, enthusiasts can look forward to lower RAM prices through at least Q2, regardless of the overall size of the final decline.
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