The global price of dynamic random access memory (DRAM) chips rose at its fastest pace in nearly four years in October, thanks to better-than-expected demand for personal computers (PC) and a cut in DRAM supply following the industry-wide restructuring over the past years.

Survivors in the fierce competition such as South Korea’s two biggest memory chip suppliers Samsung Electronics Co. and SK Hynix Inc. are believed to be benefitting the most from the upward momentum in the DRAM price.

According to data released from market researcher DRAMeXchange on Tuesday, the average contract price of the DDR3 4-gigabyte (GB) DRAM chip, mostly used in PCs, surged 25.3 percent to $1.88 in October from $1.5 marked on September 30, marking its largest on-month gain since March 15, 2013 when the price jumped 18.5 percent.

The DDR3 4GB price started to rebound in July for the first time in 21 months since October 2014. In July, the price gained 7.2 percent on-month, 3.0 percent in August, and 8.7 percent in September. But it is considered rare for the price to jump about 25 percent on month in October, market analysts said.

The recent sharp surge in the DRAM price is largely attributed to PC demand that has remained unexpectedly solid, industry observers said. Also many chip makers have shifted their focus to produce mobile phone chips, helping to reduce the global supply of memory chips, mainly used in computers, and lifting the DRAM price.

Reflecting the latest upward trend in the DRAM price, the global top two DRAM makers Samsung Electronics and SK Hynix are expected to report brisk sales gains for the October-December period. In the second quarter ended June, Samsung Electronics’ DRAM sales increased 8.7 percent from the previous quarter, and SK Hynix 4 percent. As of the second quarter, the two companies accounted for a combined 73.9 percent share in the global DRAM market - 47.4 percent by Samsung Electronics and 26.5 percent by SK Hynix.

According to DRAMeXchange, the prices of non-volatile storage (NAND) flash memory chip also picked up between 4 percent and 7 percent in the end of October from a month ago. The price of 32GB multilevel cell (MLC) NAND flash chip climbed 7.4 percent over the cited period.

Lee Seo-cheol, an analyst at NH Investment & Securities Co., said the global top three memory chipmakers - Samsung Electronics, SK Hynix and Micron Technology Inc. - have managed to survive in the fierce competition after they have aggressively ramped up DRAM production, widening the gap in memory chip production between them and smaller rivals. “There is no need for the top three to fiercely compete any more, and they are equally benefitting from the recent boom in the memory semiconductor price, which is rare,” Lee added.

By: DocMemory
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