According to reports, Morgan Stanley and other market analysts pointed out in the latest report that due to limited new production capacity, the wide application of artificial intelligence technology and the lack of capital expenditure in the past two years, the DRAM chip market is facing a huge supply gap, and the supply gap of this product is expected to be as high as 23% next year, which is a rare situation in recent years. In addition, the prices of commodity storage products are expected to increase at a double-digit rate on a quarterly basis in 2024.
In the face of this market change, Chinese customers have shown acceptance of higher memory chip prices. According to market data, in January 2024, the wholesale prices of DDR4 8Gb and 4Gb products have increased for the third consecutive month. In addition, the overall market of the storage channel has risen, and some brands have slightly raised the prices of SSDs and memory.
In this context, some enterprises have begun to actively deploy. For example, GigaDevice has launched a number of DRAM products and expects a significant increase in the amount of DRAM foundry purchased in 2024. As a leading independent DRAM memory chip packaging and testing enterprise in China, Deep Technology has reached the leading domestic and world-leading level in key technologies.
In recent years, DRAM manufacturers have been relatively conservative in their investment in new capacity, which has limited the supply capacity of the overall market. At the same time, with the rapid development of HBM (High Bandwidth Memory) technology, it consumes a lot of DRAM capacity, further exacerbating the contradiction between supply and demand. As a high-performance memory, HBM is widely used in artificial intelligence, high-performance computing, and other fields, and the demand for DRAM has increased significantly.
Figure: Standard DRAM supply is tight
The widespread application of AI technology is also an important factor driving the growth of DRAM demand. As AI technology continues to evolve, there is a growing demand for high-performance memory. Whether it's image recognition, natural language processing, or autonomous driving, large amounts of memory are required to support complex computing tasks. This has led to a rapid increase in DRAM demand while supply lags behind.
The lack of capital expenditure over the past two years has also contributed to the lack of DRAM supply. Due to the cyclical volatility of the semiconductor industry, some vendors have reduced their capital expenditures on DRAM fabs over the past few years, resulting in limited new capacity. This makes it impossible for the market to quickly adjust supply to meet demand when demand is growing rapidly.
The "supercycle" of supply-demand imbalance will have a profound impact on the DRAM chip market. First of all, in terms of price, DRAM prices will continue to rise due to insufficient supply. This will have an impact on the manufacturing cost of products such as computers and smartphones, which in turn will affect the selling price of the end product. Secondly, in terms of market share, those strategically positioned companies such as SK hynix and Samsung are expected to further expand their market share. These companies have clear advantages in terms of technology, capacity and market share, and are better able to respond to market changes.
Judging from the current market situation, the DRAM chip market will continue to maintain a rapid growth trend. With the popularization and application of technologies such as 5G, Internet of Things, and cloud computing, the demand for memory will further increase. At the same time, with the advancement of technology and the reduction of costs, the performance of DRAM chips will continue to improve, and the application range will be more extensive. Therefore, for semiconductor manufacturers, increasing investment in the R&D and production of DRAM chips will be an important direction for future development.
