Recently, it has become the norm for storage giants to raise prices, and after several waves of price increases in 2023, they are now starting to attack DRAM again. According to reports, memory giants such as Samsung Electronics and Micron plan to raise DRAM prices by 15%-20% in the first quarter of this year.
The news quickly spread within the industry and attracted widespread attention. What is the reason for this price increase, and what is the impact on the entire memory semiconductor industry?
So, why are major memory manufacturers raising DRAM prices again at this time?
Let's start with DRAM, which is dynamic random access memory and an important component of computer memory. In recent years, with the rapid development of technology, the demand for DRAM has continued to grow, but the supply is relatively tight. This has kept DRAM prices high in recent years.
Still, why did the storage giants decide to increase the already high price of DRAM by another 15-20%?
First of all, from the perspective of the industry, upstream OEMs need to improve their operating losses. While the price of other memory chips such as NAND Flash has been rising, the increase in DRAM quotations has been relatively small. In order to improve the situation, OEMs decided to shift their focus to DRAM and increase revenue through price increases.
Second, as market demand gradually recovers to stabilize, major storage manufacturers hope to urge customers to plan for future usage demand in advance through price increases. The purpose of this is to ensure supply chain stability in the future and avoid supply shortages due to surges in demand.
In addition, the original factory has also adopted a strategy of reducing production capacity to maintain high prices. It is understood that whether it is DRAM or NAND, the upstream supply situation in Q4 2023 is not in short supply. But the premise is that the customer is willing to accept the price proposed by the original factory. As long as the price is right, the original factory has the goods to sell.
In this context, reducing production capacity has become an important price preservation strategy for the original factory. For example, major Korean DRAM manufacturers have been reducing DRAM utilization rates while gradually increasing the output of high-end processes.
So, what is the impact of this price increase on the entire storage industry?
From the perspective of the industry cycle, the supply and demand of storage under the control of overseas manufacturers have gradually improved, and mainstream storage prices have continued to recover since 2023Q3, and have driven niche storage prices to bottom out in Q4.
It is expected that in the future, mainstream DRAM prices are expected to continue to rise as OEMs continue to reduce DDR4 production, industry inventories are depleted, and the downstream server market recovers. This will further promote the development and prosperity of the semiconductor industry.
However, it should be noted that price increases may also have a certain impact on the downstream industry.
As the price of DRAM rises, the cost of downstream manufacturers will also increase accordingly, which may lead to the price increase of some products, which will have a certain impact on consumers. Therefore, while increasing prices, large storage manufacturers also need to balance the relationship between market demand and customer interests.
If the increase is too high and too fast, it may affect the storage market again. Judging from the trend of quarterly price increases of some storage manufacturers, it is obvious that the price has not yet recovered to the level of 2022, and if the storage manufacturers show an attitude of being too hasty, the excessively high price may cause a psychological gap on the demand side, so as to re-evaluate the purchase volume on the demand side.
In addition, it is also a challenge for Chinese storage manufacturers to respond to changes in the global storage market.
Major DRAM manufacturers control 95% of the market, and price increases have a certain demonstration effect on the entire market. Domestic manufacturers are already facing supply chain challenges due to equipment restrictions in the Netherlands and Japan, so it is difficult to ignore the trend of collective price increases by large manufacturers, and there is an urgent need to follow up on price increases.
However, in this wave of price increases, it is difficult for domestic manufacturers such as YMTC to provide sufficient capacity supply and competitive prices. Under the influence of financial pressure and supply chain challenges, YMTC may not be able to meet market demand, which in turn makes it difficult for domestic manufacturers to negotiate with leading storage manufacturers.
Therefore, Chinese storage manufacturers need to pay close attention to the dynamics of the global storage market in order to adjust their production and sales strategies in a timely manner.
In the context of rising prices in the global storage market, Chinese storage manufacturers need to improve their technical level and product quality to enhance their competitiveness and gain more market share. At the same time, it is also necessary to strengthen cooperation and communication with global customers in order to better meet customer needs and improve customer satisfaction.
To sum up, the increase in DRAM prices by major memory manufacturers is an important dynamic in the global semiconductor market. This not only has an impact on upstream OEMs, but also brings certain challenges and opportunities to China's memory manufacturers and the entire semiconductor industry.
So, how to deal with such market changes, domestic manufacturers need to pay close attention and adjust their strategies in time.