The price of memory chips has risen sharply in the past three months, and DRAM memory has soared. The spot price has increased two or three times. Obviously, this will cause the profits of upstream manufacturers to skyrocket. The contract price of 8Gb DDR4 chips increased by 42.9% in the fourth quarter, and the spot price increased by 197%. It will continue to rise in the first quarter of next year, with an expected increase of 50%, thus pushing the price to US$13.5, which is almost less than the spot price.
The price increase of DDR4 particles has directly caused the profit margins of some manufacturers to exceed 50%.This is still the profit level of small manufacturers such as Nanya and Winbond, which is very close to the 60% profit rate of high-end HBM memory.
Because of this, Samsung has also slowed down the discontinuation of DDR4 memory and will continue to produce and supply it. However, in the current environment, industry chain sources say that the supply conditions introduced by Samsung can be called overlord terms.Manufacturers are required to accept NCNR to ensure their maximum profits.
NCNR means Non-Cancellable and Non-Returnable. Once a supply agreement is signed by a manufacturer, it cannot be canceled or returned. In other words, it is easy to understand that if you sign this agreement, you will have no regrets. Even if the price plummets during the agreement, the manufacturer who wants to get the goods must follow the agreed price, otherwise they will not be able to get the supply.
Considering that the skyrocketing price of memory will continue for another year or even two years, manufacturers may have no choice but to accept Samsung's overbearing terms. After all, the most difficult thing is to run out of stock, and there will be no profit at all.
Although upstream memory manufacturers have made a lot of money from this price increase, with profits reaching record levels, don’t get too happy too early. Memory price increases and shortages have begun to curb demand.Next year's market shipments of PCs and mobile phones are expected to decline by 5-10%.Consumers will choose not to buy but to buy less.
Memory manufacturers should not use the high demand for AI as a reason for large price increases. The controversy over the AI bubble theory will not stop. Once there is a shock next year, the memory market may also change. It is too early to confirm that prices will continue to rise for two or three years.
