DRAMeXchange pointed out that the price decline in the first quarter of 2019 will be reduced by 15% from the previous quarter to nearly 20% from the original estimate, especially the downward revision of server memory.
According to a survey by TrendForce Memory Storage Research (DRAMeXchange), December 2018 coincides with the European and American New Year's Day, and DRAM trading volume is light, so it is not included in the contract price calculation, which means that the December contract price is roughly the same as that in November. The average price of mainstream modules for 8GB is still US$60, while 4GB is about US$30, but the lowest prices of the two modules have fallen below the US$60 and US$30 levels respectively.
It was pointed out that the contract price for the first quarter of 2019 was negotiated in December last year. The overall inventory is too high, the demand is weaker than the original estimate, and the short- and medium-term economic outlook is uncertain. The average price of 8GB has fallen to both buyers and sellers. With a consensus of US$55 or lower, it is expected that the contract price in January will fall by at least 10% compared to the previous month, and the possibility of a continuous drop in February and March is extremely high. On the whole, the price decline in the first quarter will be expanded to nearly 20% from a 15% decline compared to the previous quarter from the original estimate, especially the down revision of server memory.
At present, the biggest problem in the DRAM market is not the increase in the supply side, but the demand side entering the off-season early in the fourth quarter of 2018, making the problem of rising inventory emerge early. Looking at the fourth quarter of 2018, among all suppliers, Micron had the largest price cut, so some of the high inventory levels were able to be eliminated in a timely manner; while Korean factories had a smaller price cut, resulting in a shrinking shipment. The inventory will continue to accumulate until the first quarter of 2019 and will be considerable. In the short term, the supply bit growth will continue to be greater than the sales bit growth, and the rising inventory level will become the biggest pressure on prices. It is expected that the decline in DRAM prices starting in the fourth quarter of 2018 will continue for more than four quarters.
The top is fat and the bottom is thin, the profit margin of the module factory is compressed
Although DRAM prices have fallen since the second half of 2018, due to the high industry concentration, price-cutting competition will only erode the current huge profits. Therefore, in 2019, various factories plan to reduce capital expenditures to stabilize DRAM prices and balance the market. Supply and demand environment. It is worth noting that the upstream OEMs enjoy high gross profit, but the profit margins of the downstream memory module makers and customers have been compressed. The overall profitability of the memory industry in 2018 will show up and down. In 2017, due to the sharp increase in DRAM prices in the short term, module makers benefited from the low-cost inventory they held in their hands and turned into actual profits. Most module makers performed very well in profitability.
However, since 2018, the price of DRAM has been at a high-end level, and the profit margin of the particle price difference has become smaller. Module makers can only profit from processing costs. In addition, DRAM prices have begun to fall in the second half of the year, and downstream module makers have held hands. Some inventory losses have dragged down profits. Many downstream manufacturers' actual profits in 2018 were only 10% of the previous year, and even started to lose money. It is expected that 2019 will face a more severe test.
