Citi: Memory makers' pricing power may decline in the second half of the year

On August 22, Citigroup said based on demand trends that semiconductor companies focusing on memory chips may face the risk of a downward trend in pricing power in the second half of the year.

Citi said it expects additional downside risks to memory chip prices in the second half of the year, given the increased likelihood of tepid server demand leading to further weakness in demand for memory chips. Analyst Peter Lee, referring to a certain class of memory chips, expects companies such as Alphabet, Amazon and Microsoft to not place new orders for DRAM in the second half of the year as they digest inventories. Average selling prices in the fourth quarter are expected to decline 17% from the previous quarter, compared with a previous forecast for a 13% decline. The change was attributed to "near-term persistent macro uncertainty."

According to previous reports from Jiwei.com, Morgan Stanley (Morgan Stanley) Securities has also warned recently that due to weak demand, memory prices will decline more rapidly in the second half of the year, affecting the three major memory types.

The three major types of memory are DRAM, NOR Flash, and NAND Flash.

The report pointed out that due to weak demand and high inventory levels of manufacturers and clients, the memory supply chain will face huge destocking pressure, resulting in a further decline in prices in the second half of the year, and the severity will be greater than market expectations.