As the memory market is expected to hit bottom in the second quarter and inventory reduction due to production cuts and new demand is expected, news has been reported that the average selling prices (ASPs) of DRAM and NAND flash are showing a decline that exceeds initial expectations.

According to market research firm TrendForce on the 9th, DRAM and NAND flash prices in the second quarter of 2023 are expected to exceed previous forecasts due to sluggish server shipments and high inventory levels, leading to further declines in ASP for some products.

From the initial outlook, DDR4 PC DRAM is expected to decline by up to 7%, with ASPs for both DRAM and NAND flash expected to decline by an additional 2-7%p.

By product, PC DRAM is driving down prices due to the oversupply of existing DDR4 despite suppliers’ emergency inventory reductions, while the next-generation product, DDR5, is showing a relatively gradual price decline due to reduced supply. TrendForce estimates an ASP decline of 15-20% for DDR4 and 13-18% for DDR5.

Server DRAM inventory pressures have increased due to weak server demand. Accordingly, the quarterly ASP decline expanded to 18-23%, and in DDR5, supply was limited due to PMIC compatibility issues, and the price decline was limited to 13-18%.

Mobile DRAM purchase momentum has been increasing since last year as smartphone memory inventory adjustments are completed. On the other hand, as memory suppliers face high inventory pressure, customers are increasing their negotiating power by combining 3Q demand with 2Q demand, so suppliers are expected to supply memory with additional discounts. The 2Q mobile DRAM ASP decline is expected to expand by 13-18%, up 2%p from the initial estimate.

Considering that DDR5 currently has a small market share in the overall market and thus its market influence is limited, TrendForce forecasts that the overall DRAM ASP decline in the second quarter will be 13-18%.

NAND flash is being affected by price declines in enterprise SSDs and UFS, which together account for more than 50% of total NAND consumption. The report noted that the oversupply situation is still not resolved.

Enterprise SSDs are facing a difficult situation where server demand continues to decline, inventory pressure persists, and orders are not increasing significantly even with the reopening in China. As server ODMs are also not expected to see an increase in orders due to high inventory levels, the ASP decline for enterprise SSDs in the second quarter is also expected to increase to a 10-15% decline.

UFS also expects a 10-15% price drop, up 2 percentage points from its initial estimate, as suppliers offer greater discounts amid high inventory levels.

SK Hynix said in its first-quarter conference call that “memory sales have plummeted due to weak IT device shipments and negative growth in the PC market,” and that “memory prices have fallen by 60% compared to the peak.”

With demand for AI servers expected to increase and sales of IT devices expected to gradually recover from the second half of the year, the industry is expecting a rebound in the second half of the year, with the semiconductor market hitting rock bottom in the second quarter.