Track Hyepr | Old memory contract prices are skyrocketing: Why is this?

Author: Zhou Yuan / Wallstreetcn

Recently, AI memory prices have risen sharply. The market focus has shifted to DDR4 (Double Data Rate 4 SDRAM)/DDR5-related prices or HBM3e production capacity bookings, but few have noticed that traditional DDR3 prices have seen new changes due to insufficient supply.

Wallstreetcn has recently learned from the supply chain that Nanya Technology and Winbond's DDR3 contract prices have increased by about 50%-100%.

These two companies are the core global suppliers of DDR3 memory (including DDR2).

A marketing person from a leading DDR4/DDR5 or HBM3e company asked Wallstreetcn in surprise: "Are there still people buying DDR3 now?"

In fact, although DDR3 has been replaced by DDR4/DDR5, due to its large stock and low cost, it is still widely used in "mid-range and lower office/home devices, second-hand computers," such as budget office computers and entry-level gaming PCs for students, and remains one of the main types of memory in the current second-hand market.

In addition, DDR3 is also widely used in embedded and specialized equipment, such as industrial control terminals, old set-top boxes, low-end NAS (network storage), etc., devices which require long-term stable operation but have low performance requirements.

So why is it that DDR3, despite its low performance, can nearly double its price?

Sources told Wallstreetcn that the main reason is the demand in the AI accelerator card market, which has led major memory manufacturers such as Samsung, SK Hynix, and Micron to stop production of DDR3, partly expand DDR4 production capacity, and fully compete in meeting the capacity needs of HBM3e (high bandwidth memory) and HBM4.

Since the second half of 2024, the three major memory giants – Samsung, SK Hynix, and Micron – have continued to shift their 12-inch wafer production line resources towards DDR4 and HBM3e.

Samsung transferred part of its DRAM production at its Pyeongtaek plant to DDR4 server memory production; SK Hynix converted part of its DDR3 production line to DDR4; Micron also drastically reduced its proportion of DDR3 production, allocating that capacity to DDR4 and higher standard products.

These capacity reduction measures have directly led to a sharp decrease in global monthly DDR2 and DDR3 memory production.

The explosive growth in demand for DDR4 memory has become a key factor driving the industry's production shift.

In the consumer electronics field, as laptop performance continues to improve, requirements for memory read/write speed and data processing capability are becoming increasingly stringent. DDR4, with its high bandwidth and low latency, is being actively adopted by mainstream brands. The proportion of laptops equipped with DDR4 memory has greatly increased, and mainstream brands only use DDR3 memory in small quantities in entry-level models, and plan to fully switch to the DDR4 platform.

In the server field, the rapid development of cloud computing companies, especially the extreme demand for AI-related computational power, has caused a surge in demand for DDR4 or HBM3e high-capacity memory for servers. Procurement volumes have risen sharply, order cycles have lengthened, and some companies have even signed "minimum purchase volume" agreements to lock in production capacity.

Meanwhile, as the core storage component in AI servers, HBM3e demand is growing exponentially.

With explosive growth in applications such as large AI model training and high-performance computing, AI servers have dramatically increased requirements for memory bandwidth and capacity. HBM3e, with its high bandwidth, low latency, and close cooperation with GPUs, has become the top choice for AI servers.

It is worth noting that market demand for DDR2/DDR3 memory has not decreased in sync with the supply reduction.

In the industrial control sector, products such as textile machinery, smart meters, and rail transit signaling equipment, due to their long product life cycles, still heavily rely on DDR3 memory.

In the automotive electronics field, some older in-car entertainment systems still use DDR3 memory, and the rising cost of memory procurement is putting pressure on related companies. Additionally, in emerging markets such as Africa and Southeast Asia, entry-level laptops equipped with DDR3 memory remain in steady demand, further exacerbating DDR3 supply-demand imbalances.

From the perspective of the supply chain transmission effect, the rise in DDR3 memory prices has already had a significant impact on downstream companies.

In the security monitoring sector, production costs of products using DDR2 memory are rising, leading top companies to launch replacement models equipped with DDR4 memory, but clearing old product inventory is becoming challenging.

It appears that the supply-demand imbalance in the DDR3 memory market will be difficult to reverse in the short term.

On the supply side, giants such as Samsung and SK Hynix have made it clear that they will continue to focus on expanding DDR4 and HBM3e capacity, with no plans to restore DDR3 capacity for the time being. Nanya Technology and Winbond, while the main suppliers in the current DDR3 market, have limited capacity and also need to consider their own DDR4 capacity planning, making it difficult to fill the gap left by the top companies.

On the demand side, the industrial control and automotive electronics sectors will continue to need DDR3 memory for some time, and it cannot be fully replaced in the short term.

For companies in the industry chain, responding to current market changes will require differentiated strategies.

Large companies can accelerate product upgrades, replacing DDR3 memory with DDR4, to reduce reliance on traditional memory; small and medium-sized enterprises can lock in costs via "centralized purchasing + long-term contracts," while also exploring deeper cooperation with suppliers such as Nanya Technology and Winbond to secure priority supply rights.

Risk Warning and DisclaimerThe market has risks, and investment should be made cautiously. This article does not constitute personal investment advice, nor does it take into account the special investment goals, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are appropriate to their particular situation. Investments made accordingly are at your own risk.