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Server DRAM prices tipped to decline further in Q4, boding ill for Korean chipmakers

11:06 September 17, 2020

SEOUL, Sept. 17 (Yonhap) -- Prices for server DRAM chips are expected to further decline in the fourth quarter of the year, a report showed Thursday, boding ill for South Korean chipmakers amid the novel coronavirus pandemic.

Market researcher TrendForce recently revised its server DRAM prices forecast for the last three months of 2020, saying that server manufacturers still hold a relatively high inventory of the product, while the industry is dealing with an oversupply issue.

It originally predicted a 10-15 percent on-quarter drop in server DRAM prices for the fourth quarter, but the projection has been now revised to a 13-18 percent decline.

For the third quarter, TrendForce kept its earlier estimate of a 10-15 percent price decline.

"The server DRAM segment is still experiencing significant oversupply, while the demand side is also affected by the fact that buyers including data centers are dealing with high inventory," TrendForce said. "Therefore, contract prices of server DRAM products continue to descend to new lows."

This image created by Yonhap News TV shows logos of South Korean chipmakers Samsung Electronics Co. and SK hynix Inc. (PHOTO NOT FOR SALE) (Yonhap)

Server DRAM is considered one of the most profitable DRAM products and took a boost from the pandemic-driven stay-at-home economy that expedited remote working and online learning.

A decline in DRAM prices hurts South Korea's major chipmakers -- Samsung Electronics Co. and SK hynix Inc. -- that dominate the global market.

Samsung led the DRAM market with a 43.5 percent share in the April-June period, followed by its local competitor SK hynix with a 30.1 percent share, according to data from TrendForce.

Samsung and SK hynix may have secured upside orders from Huawei Technologies Co. in recent weeks as the Chinese tech titan has been trying to secure more memory products to cope with the United States' restrictions.

But TrendForce said Huawei's aggressive chip shopping is not enough.

"Huawei's server DRAM procurement ahead of time is unable to reverse the downswing of server DRAM prices, which is expected to further decline in the fourth quarter of 2020," it said.

The market researcher predicted that it will take some time for server DRAM to make a recovery.

"Given the excess inventory of server barebones, one to two quarters are needed to correct this situation, meaning original design manufacturers (ODMs) will be unlikely to restart their procurement of server DRAM and server components until late 2020 or early 2021," TrendForce said.

As for other DRAM products, TrendForce previously projected prices for mobile DRAM and consumer DRAM chips to go down 0-5 percent in the fourth quarter of 2020.

kdon@yna.co.kr
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