Chip supercycle view revives with DRAM, NAND prices at multi-year highs

The contract prices of memory chip prices are hovering around multi-year high levels, fanning the view that the global semiconductor market is entering a boom cycle.

According to market data provider DRAMeXchange on Friday, the July contract price of DDR4 8Gb for PCs, one of the most common DRAM products, has risen 7.89% to $4.1 from the previous month. The July figure is the highest since April 2019.

“Given the speed with which the semiconductor technology advances, the price of 8Gb DRAM chip usually falls by 20% every year. The current $4 range means DRAM prices are on an ascending trendline,” said an industry official.

NAND flash prices are also rising.

The July contract price of 128Gb NAND flash used in memory cards and USBs was $4.81, up 5.48% from the previous month. The latest reading is the highest since September 2018.

The recent gains in chip prices are thanks to higher consumer demand for TVs, smartphones, laptops and cars, which bounced back from the COVID-19 crisis sooner than expected.

Industry leaders such as Samsung Electronics Co. and SK Hynix Inc. are already running their plants at full capacity, but a shortage has been an issue across industries as makers of cars, smartphones and electronic devices compete for chips amid depleting supplies.

Samsung and Hynix are the world’s two largest memory chipmakers.

MEMORY PRICES TO REMAIN ELEVATED

Industry officials expect DRAM and NAND flash memory chip prices to remain at elevated levels for the rest of the year, dispelling market concerns that a resurgence of the COVID-19 pandemic may cool demand for semiconductors.

Executives at both Samsung and SK Hynix have said they are optimistic about the market outlook.

While reporting its highest quarterly profit in three years on Thursday, Samsung’s memory business chief Han Jin-man said that with increasing vaccination rates globally, the chip industry’s business sentiment has turned bullish.

Chip inventories at major clients have also come down to “considerably low levels,” he said.

Noh Jong-won, SK Hynix’s chief financial officer, said earlier this week that he expects global DRAM demand to rise more than 20% this year.

SK Hynix, which posted a loss in its NAND business in the second quarter, will make a turnaround in the third quarter, he said.

Write to Hyung-Suk Song at click@hankyung.com
In-Soo Nam edited this article.