DDR4 May Jump 50% on Tight Supply

The upward trend in legacy DRAM prices is anticipated to persist into the second half of the year. This is primarily due to a tight supply of general-purpose DRAM, as memory semiconductor manufacturers concentrate on producing High Bandwidth Memory (HBM) and server DRAM. The ongoing surge in demand for HBM, primarily driven by Cloud Service Providers (CSPs) for AI investments, is projected to cause a prolonged supply shortage and price increase for legacy DRAM.

Morgan Stanley, a global investment bank, predicted that DDR4 prices will surge by 50% in the third quarter of the year, with an additional 10% rise expected in the fourth quarter. DDR4, a legacy product found in PCs, has already reached an all-time high price. As of July 31, the average fixed transaction price for an 8Gb DDR4 1Gx8 for PCs hit $24, marking an eightfold increase over the past decade.

This price surge is attributed to the shrinking supply of legacy DRAM. The major memory companies - Samsung Electronics, SK Hynix, and Micron - have reallocated their production capacity to HBM and server DRAM. Due to the complex manufacturing process and larger chip area of HBM, producing the same capacity requires three to four times more capacity than general-purpose DRAM. Consequently, the balance shifts towards a decrease in the supply of general-purpose DRAM as HBM consumption expands.

The supply constraints on general-purpose DRAM are expected to worsen as demand for HBM continues to expand, particularly among CSPs. Major customers, including Broadcom, Nvidia, Google, and AMD, are revising their mid- to long-term demand plans upward, driven by the AI boom. Research firm Meritz Securities noted that these companies' HBM demand plans range from 10 to 40 billion Gb, indicating a growing demand that outpaces supply.

The supply shortage of general-purpose DRAM is already apparent, with Taiwanese memory module manufacturer Apacer forecasting a more than 70% drop in DRAM supply from major manufacturers to independent module companies next year. Apacer CEO Chang Chia-kun expressed concern over the lack of secure supply. The DRAM supply constraints are expected to persist until at least mid-2027, with SK Hynix President Kwak Noh-jung warning that 2027 could be the worst year in the industry's history.

This scenario benefits memory manufacturers, as HBM sales soar while the limited supply of general-purpose DRAM drives up prices.