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DRAM spot prices across the board shoot up post-SK Hynix fire

Posted: 02 Oct 2013 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? graphics memory? manufacturing?

According to DRAMeXchange, a research arm of TrendForce, the fire accident experienced by SK Hynix's Wuxi plant has shaken the DRAM industry. The incident, which has led to a surge in market demand, pushed spot market prices for mainstream PC DRAM 2Gb to 36 per cent since the day of the fire (the calculation is based on the chip's agreed price of $2.18 on September 24). (See SK Hynix's DRAM supply threatened by fire damage .)

A growth of at least 10 per cent, it is worth noting, is also expected for the soon-to-be-announced September contract prices. Given that SK Hynix was originally the supplier with the highest market share in the graphics memory market (leading both Samsung and Micron), a major shortage in graphics DRAM (for instance, DDR3x16, GDDR3 and GDDR5) has inevitably occurred. The Taiwan companies with noticeable, though much lower, shares in this market include Nanya and Winbond.

Graphic memories have, since the very beginning, belonged to a niche market, with price movements that generally correlate strongly with those of PC DRAM. Given that their supplies had traditionally always remained steady, a habit has never really been developed on the part of many manufacturers to maintain a "safety" inventory level for their graphics-based memory products. In the periods following the Wuxi plant fire accident as well as the heightened uncertainty in the supply side, SK Hynix's ability to meet its supply schedules has clearly become restricted. This has immediately caused the market prices of graphics memory to fluctuate and, later, prompted relevant manufacturers with no more than one month's worth of inventory to scout for other supply sources (some of these graphic chip makers include notable companies such as Nvidia and AMD).

According to TrendForce, the price for the most popular memory product (DDR3 4Gb 256Mx16 1866/2133MHz) has managed to rise by 20 per cent since the 9/4 fire accident to about $3.95. It would not be unreasonable, in the following periods, to expect the said price growth to eventually surpass that of PC DRAM. With regard to the high end GDDR5 2Gb chips, given that the number of suppliers are getting increasingly lower, the official prices have exceeded $3.8.

Other than the prices for PC DRAM (which has been soaring ever since the fire accident) and the supplies of graphics memory components, the prices of products such as server DRAM and speciality DRAM are also likely to be affected. Sources with familiar knowledge of semiconductor plants have indicated that the recovery period for the Wuxi plant would take as long as three months to half a year. Thus, from 4Q13 to 1Q14, the market supplies are expected to remain tight.





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