DRAM prices soaring 40 percent this quarter due to undersupply, more price hikes to come

As we've been writing for a couple of months now, pricing of DRAM is going up in a big way as the market is suffering from inadequate supply. Memory vendors have shifted production to meet the growing demand from the smartphone market and this is having a major impact on the pricing of DRAM for computers.

Prices soared a lot last year and DRAMeXchange reports contract prices of PC DRAM modules in the first quarter of this year are on track to rise almost 40 percent on average. Further price hikes are expected in the second quarter of this year and analysts believe prices may stabilize in the third quarter.

Peak season demand and surging prices for DRAM products across different applications resulted in an 18.2% sequential growth in the global DRAM revenue for the final quarter of 2016, reports DRAMeXchange, a division of TrendForce.

Smartphone shipments peaked in the fourth quarter on account of the traditional busy season. Chinese smartphone brands continued to post strong sales while Apple benefitted from the release of iPhone 7. "Rising demand for mobile DRAM kept squeezing the industry's production capacity for PC DRAM," said Avril Wu, research director of DRAMeXchange. "Contract prices of PC DRAM modules increased by more than 30% sequentially on average in the fourth quarter due to insufficient market supply. Server DRAM lagged behind PC and mobile DRAM in terms of price hike during the same period, but it is expected to catch up in the first quarter of this year."

Looking ahead, memory content for various devices will continue to increase. Also, the current capacity expansion efforts undertaken by suppliers will not start to affect the market until the second half of 2017. In the meantime, the general undersupply problem will worsen, and contract prices of PC DRAM modules in this first quarter may see an even larger sequential increase of nearly 40% on average. Rising prices are expected for the second quarter as well.

Here's a real-life example of the price evolution of a random DDR4 kit. This kit could be bought for $69.99 in June 2016 and now commands a price of $124.99.