Analysts: PC DRAM Prices May Stabilize

As our frequent readers know, DRAM prices depend on supply and demand. While demand for DRAM depends on makers of computers and consumer electronics, supply depends on output of memory manufacturers. All sides will always try to cut down their costs, which is why the manufacturers introduce new manufacturing technologies every 18 to 24 months (producing more ICs per silicon wafer) and continuously try to improve their yields (higher percentage of usable ICs per wafer).

Since smaller fabrication processes can increase the production of memory ICs without needing to expand the manufacturing fabs, DRAM IC output as a result increases significantly every couple of years. In a bid to slowdown such natural decrease of costs and prices, according to analysts, leading DRAM manufacturers intend to slowdown transitions to smaller process nodes. This sounds slightly counter intuitive, as any manufacturer with a smaller node will have the advantage over the competition (anyone interested in this should go look at Game Theory).

Market observers from DRAMeXchange point out that while new process technologies are getting more expensive to develop, and fabs are getting costlier to equip, manufacturers of memory are cutting their research and development spending. This comes about as a result of decreasing revenues, which will inherently slow down adoption of new process technologies and therefore slow down reductions of DRAM IC costs and prices. Avril Wu, research director at DRAMeXchange, believes that in 2016 the total DRAM bit output will slow down and we will only see an increase of 23.1% year-over-year, compared to a 30% to 50% increase typically seen.

According to Mr. Wu, this is going to happen because of the slow transition to 10 nm class process technologies, as well as insufficient yields at 20/21 nm at other manufacturers (a claim that cannot be verified).

Samsung has already started mass production of DDR4-3200 ICs using its first-gen 10 nm-class fabrication technology (which some market observers call 18 nm) and plans to make LPDDR4 chips using the same process in the second half of the year. To stay competitive, Micron and SK Hynix will simply have to follow their rival with their 1x nm fabrication technologies. As a result, depending on yields, DRAM bit supply will increase, whereas DRAM prices will likely decrease if demand cannot catch up with supply.

18 nm and 16 nm process technologies will inevitably increase output of DRAM, but they are not the only factor that will affect production of computer memory in the coming years. Samsung’s giant manufacturing facility near Pyeongtaek, South Korea, will begin operations in 2017. The new fab is said to be two times larger than Samsung’s S1 plant in Giheung, South Korea, and is expected to accommodate up to five semiconductor production lines. The total cost of the initial fab required investment of 15.6 trillion won ($13.5 billion today) and in 2015 the company announced plans to expand it even further (by pouring in additional $8 to $9 billion). The fab will be used primarily for DRAM production, but Samsung could also use it to make other chips (i.e., NAND). We do not know exact production capacity of the new fab, but the S1 can process up to 170,000 wafers (300 mm wafers) per month and the addition of a fab twice as big will have a drastic effect on the DRAM supply. As a result, prices will be affected.

One predicition about DRAM supply gravitates around major purchasers of large about of ICs. One company gets mentioned a lot in this case: Apple. A good news story for DRAM makers in the short term should be that Apple is expected to release its next-generation iPhone in the second half of the year, and hence it will require a lot of memory (analysts predict that this will be LPDDR4). Quite naturally, manufacturers will have to shift production from PC DRAM to Mobile DRAM, which will lower supply of DDR3 and DDR4 amid increase of demand from PC makers in the second half of the year. As a result, memory makers will be able to sell more high-margin LPDDR4 memory (not only to Apple, of course) and either stabilize or even increase prices of mainstream memory.

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  • sonicmerlin - Monday, July 25, 2016 - link

    The title of the article incorrectly states "since 2015", when the text clearly states the 20% drop is from early 2016. Reply
  • Ian Cutress - Monday, July 25, 2016 - link

    That was a mistake on my part. Updated :) Reply
  • Mikuni - Monday, July 25, 2016 - link

    How can the fab cost so much? 12-13 billions? It would be interesting to see an article detailing the design and processes of such buildings, the machinery used etc. Reply
  • woggs - Monday, July 25, 2016 - link

    The tools installed are the money... These are a little dated but interesting...
    https://www.youtube.com/watch?v=SeGqCl3YAaQ
    https://www.youtube.com/watch?v=4Q_n4vdyZzc
    Reply
  • mejobloggs - Tuesday, July 26, 2016 - link

    Those videos are mind boggling, just trying to think how much technology involved in all that Reply
  • AndrewJacksonZA - Monday, July 25, 2016 - link

    There's a typo on the headings on the first graph: "sopt" instead of "spot" Reply
  • anomalydesign - Monday, July 25, 2016 - link

    These findings of DDR4 prices continuing to go lower don't match with my personal experience. In ordering RAM in the past month I've come to accept that the prices are significantly higher than they were earlier in the year.

    After reading the article I though perhaps I was misremembering the prices, so I looked back through my order history at Newegg. I purchased multiple 16 and 32GB DDR4 kits from different brands back in April, and in each case the listed price on those kits was not only lower than the current price (by at least 10-25 percent), but they were well below the price of ANY comparable kit currently available.

    So I don't know why the graphs and examples in this article don't line up with what I've experienced. I think perhaps looking at particular brands and models is part of the issue, as one that is priced at the entry level can move up, or vice versa. But unless there is a way to show prices not of a particular kit, but of the least expensive example of a given speed/capacity, I don't think these findings reflect the reality of the RAM market.
    Reply
  • anomalydesign - Monday, July 25, 2016 - link

    One example, which has gone from $110 to 152 in the past few months: http://www.newegg.com/Product/Product.aspx?Item=N8... Reply
  • CaedenV - Monday, July 25, 2016 - link

    It could be that you have been scooping RAM up on sales and deals available at the time, and the chart prices are for the 'normal' or 'average' going price of the products.
    I know that for DDR3 I picked up 16GB for my home server last spring for ~$80, and then during prime day sale I picked up another 32GB for my desktop for $65. Just goes to show that charts only show part of the picture... But still, RAM is dirt cheap compared to a year or two ago!
    Reply
  • JoeyJoJo123 - Monday, July 25, 2016 - link

    No, your experience here is correct; Anandtech's reporting is incorrect.

    See the price graph here of a common set of DDR4-2400 set of ram with no heatspreaders over time this year.

    https://pcpartpicker.com/product/kCL7YJ/gskill-mem...

    Lowest RAM prices were around April~May this year, after that prices began to pick up, and today, prices sit about ~20% higher than their historical low around April~May. And this isn't the only set of RAM that had the same price swings...

    See:
    https://pcpartpicker.com/product/tPVBD3/corsair-me...
    https://pcpartpicker.com/product/ydCrxr/gskill-mem...
    https://pcpartpicker.com/product/xxs8TW/gskill-mem...

    Etc...
    Reply

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