Due to uncertainties in the global economic conditions, the DRAM market has seen oversupply for the first half of 2015. The industry are having difficulties consuming PC DRAM capacity because the notebook shipments have been weak. As a result, the contract prices for PC DRAM have been falling. The server market however is booming due to the demands for white box servers from major tech companies like Google, Facebook, Amazon and Microsoft. The server DRAM demands are thus buoyed by the strong server shipments, but the momentum of growth is starting to slow down. Moreover, the price gap between the new generation DDR4 and DDR3 products for servers are continuing to narrow as the prices of the DDR4 products have been falling due to their robust shipments. Therefore, the end market has shifted to a wait-and-see posture by delaying order placements in order to reduce stock-up costs.
 
DRAMeXchange, a division of TrendForce, says the average price of DDR3 R-DIMM for the first half of this year has fallen by 7~9%, while the average price of DDR4 R-DIMM has fallen by nearly 20% during the same period. Moreover, the price difference between DDR4 and DDR3 products for servers has narrowed from 30% at the beginning of this year to 10% by the end of the second quarter.
 
DRAMeXchange’s analyst Angel Liou notes that this year’s market has been focusing on the new generation server DRAM product, DDR4 R-DIMM, with respects to both penetration rate and price. DDR4 will likely become the mainstream product for server application as early as this year’s fourth quarter owing to Intel’s strong promotional efforts and DRAM manufacturers’ aggressive introduction of DDR4 into their product lineups. Moreover, the price difference between DDR4 and DDR3 will shrink under 5%. There is even a chance that they will be on par.
 
Presently, the mainstream DIMM modules’ capacities for server application come in 8GB and 16GB. The production of 8Gb mono-die chips relative to other products will rapidly increase as the 20/21 nm manufacturing technologies mature. In the future, mainstream products will have even higher capacities, advancing to 32GB or even 64GB. The explosive growth of cloud services is expected to fuel the ever-increasing demand for bigger memory capacity for a server unit.
 
Demands are likely to return in the second half of the year as the period is the traditional peak season for PC and server DRAM. The market is also going to benefit from the launch of Intel’s new platform. Nonetheless, the overall sales will still hinge on the global economic conditions. The uncertainties in the European economy in particular will have a greater impact on the sales of enterprise servers because businesses become more conservative in their replacement demands. With most data centers located in the United States and China, the recent economic turnaround in the two countries will stabilize the demands of server DRAM from Internet data centers. Liou adds that the historically, the price fluctuations of PC DRAM and server DRAM products have extremely high correlations. However, the changes in server DRAM’s prices have been smaller compared with changes in PC DRAM’s prices. Since PC DRAM will see returning demands and milder price decline in the third quarter, DRAMeXchange expects the drop in the average price of server DRAM to ease in the same period as well.

By: DocMemory
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