DRAM ASPs climbed to US$3.70 in June 2020 before tapering off to US$3.51 in July and August, according to IC Insights, which expects modest price erosion through the end of this year.

DRAM ASPs started on a steep downward trend in the second half of 2018 that eventually bottomed out at US$3.04 in December 2019, IC Insights said. DRAM prices rebounded in the first half of 2020, driven by demand for PCs and other devices enabling remote work, distance learning and other stay-at-home activities amid the COVID-19 pandemic. DRAM demand also came from datacenter and server applications that were needed to handle the surge of online activity, IC Insights indicated.

Nevertheless, IC Insights continued, a substantial jump in DRAM demand (and prices) that often takes place in the third and fourth quarters of each year and that coincides with the introduction of new smartphone models is unlikely to be as strong this year due to the pandemic disrupting typical seasonal buying patterns and consumers being more cautious with their discretionary spending.

While total 5G smartphone shipments are expected to reach 200 million units this year, IC Insights does not believe that sales of these leading-edge handsets will be enough to catch DRAM suppliers off-guard and create a DRAM supply shortage.

One segment that may provide a boost to DRAM demand late this year is the game console market, IC Insights said. Sony and Microsoft will release their new-generation game consoles before the end of 2020. DRAM suppliers are hoping that demand for the new consoles will offset some of the lost revenue they expect on account of fewer smartphone shipments, IC Insights indicated.

Samsung Electronics, SK Hynix and Micron Technology all anticipate softer DRAM sales in calendar fourth-quarter 2020 and first-quarter 2021. In Micron's case, it is banned from selling DRAM to Huawei in China due to trade restrictions that went into effect on September 15. It is believed that Huawei accounted for at least US$500 million in quarterly DRAM sales for Micron, and was the primary reason for Micron's softer DRAM sales projections for the balance of this year and the first quarter of 2021, IC Insights said.

Micron could be granted a license to sell some of its products to Huawei just as Intel and AMD were granted a license to sell some of their products to the Chinese electronics giant. However, IC Insights noted, even if granted a license, Micron's DRAM sales in the fourth quarter of calendar 2020 would not likely benefit tremendously since Huawei ordered as much DRAM as it could ahead of the September ban in order to keep its production lines running. Huawei reportedly has about six months of DRAM inventory.

The pandemic has made it difficult for DRAM suppliers and system OEMs to plan much further out than one quarter as they anticipate sales demand, IC Insights said. However, as economic recovery begins and visibility improves, businesses will again be able to make long-range investment decisions. Inventory depletion, a transition to smaller process nodes, ongoing demand from server and PC markets, 5G smartphones shipments that some predict will reach 500 million units in 2021, and other emerging system applications are forecast to provide the DRAM market with strong double-digit growth in each of the next three years, according to IC Insights.

By: DocMemory
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