DRAM Prices Plunge 35.7% Amid Market Challenges

According to market research firm DRAMeXchange, the average fixed transaction price for general-purpose PC DRAM products (DDR4 8Gb 1Gx8) was $1.35 as of November 2024. This marks a significant 35.7% decrease from $2.10 in July. The sharp decline in DRAM prices during the second half of this year can be attributed to unfavorable demand and supply conditions, raising concerns about the broader economic impact.

Demand for information technology (IT) devices, such as smartphones and PCs, has yet to recover. This has led major IT companies to reduce their DRAM inventory levels. On the supply side, Chinese companies are aggressively pushing into the market. While China has not yet caught up with South Korea in advanced products like High Bandwidth Memory (HBM), Chinese firms are making strong inroads in traditional products like DDR4, with price competitiveness shaking the market. Reports indicate that Chinese memory companies are selling DDR4 8Gb DRAM for around $1, about half of the current market price.

Kiwoom Securities researcher Park Yoo-ak stated, "DRAM prices are expected to fall significantly by the end of this year and into early next year, more than anticipated. Due to the low prices set by Chinese memory companies, the growth rate of DRAM supply will exceed the growth rate of demand, a situation expected to persist until the second quarter of next year." A senior business executive echoed these concerns, suggesting that fluctuations in DRAM prices could hurt the performance of leading companies like Samsung Electronics and potentially affect tax revenues.

As of November, the average fixed transaction price for DDR5 16Gb products for PCs was $3.90, down 3.7% from $4.05 in October and 16.1% lower than $4.65 in July. The industry is concerned that if semiconductor prices continue to decline at an accelerated pace, the negative impact on the overall economy could intensify. Prolonged poor performance from major manufacturers like Samsung could disrupt South Korea's multi-trillion-won annual semiconductor investment plans, potentially leading to reduced investments and a contraction in the domestic economy.

An industry expert remarked, "If the semiconductor downturn coincides with the current situation, it could have a significant impact on the entire economy," adding, "At the very least, the political sector should consider measures to reduce uncertainty in business operations."

The current state of the DRAM market suggests that a challenging period lies ahead, with prices expected to continue their downward trend into early next year.