DDR5 memory has fallen sharply in price. Why and what to expect?

At Selectel, we are closely monitoring the semiconductor market. And it is, let’s say, not very positive – a number of analysts

predict

the end of the crisis only in a couple of years. Even the optimists, who in the middle of last year spoke of the end of problems in 2022, have now changed their minds in favor of a negative outlook.

But still, there is reason for optimism, or rather, it has just appeared – the fact is that DDR5 memory has begun to fall sharply in price. Moreover, the drop is very significant – in some cases we are talking about reducing the cost by 80% at once. About the reasons for the cheapening of memory strips and the possible prospects for the semiconductor market – under the cut.



More about price drops


The cost of DDR5 memory sticks was the highest in December last year. The reason is the lack of new memory in anticipation of the popularization of Intel Alder Lake. These processors are the first in the world to support DDR5.

According to market experts, the expansion of production of new chips will certainly cause a protracted shortage of new-type memory, followed by price increases. To the surprise of many market players, the situation turned out to be different; it began to develop completely differently than expected.

Neither the shortage of DDR 5 strips, nor the cost began to worsen. At the same time, relatively inexpensive representatives of the Alder Lake family appeared on sale, which, it would seem, should lead to an avalanche-like growth in demand for new memory. But whether chip makers ramped up shipments faster than planned, or laptop and PC vendors decided to continue using DDR 4, demand for DDR 5 hasn’t skyrocketed.

More precisely, it has increased, but the suppliers of the strips have provided memory for everyone or almost everyone.

It is worth noting that the first DDR5 strips appeared in June 2021, almost six months before the release of the processors mentioned above. Then we wrote that the price difference between DDR4 and DDR5 would be the highest in the history of DDR chip production.

At the very beginning of the shipment of new memory sticks, it was like that, the cost for a set of two 16 GB sticks was about $400. The most interesting thing is that at that time the parties were sold out, despite the fact that it was still impossible to use them, because there were no systems that supported the new standard. Whatever it was, but soon the price of such a set fell to $311. Then the cost of memory increased for various reasons, but soon began to fall again.

So, in December, almost $1,300 was already asked for the same set. True, just a month later, the cost fell to $410, returning to the initial figure.

According to experts, different sets of memory showed different price dynamics. But the fact remains that almost for the first time since the beginning of the crisis, semiconductor systems began to fall in price, and very rapidly. As mentioned above, some sets have become cheaper by 80%.

The market is still unstable


So far, no one knows whether the fall in prices will continue or whether the situation will soon change to the opposite. The major suppliers are now selling slats at a relatively low fixed price. But intermediate suppliers, those who sell memory in small batches, often change the price tag depending on the increase or decrease in the deficit.

Be that as it may, but large retailers at least adhere to the recommendations of the manufacturer, without raising prices too much. Small companies are not instructed, so they can use their own pricing policy. But still, there is now a certain moment of stability in the market, which has been in a fever for several months now.

Moreover, according to market players, suppliers began to supply so many memory sticks to the market that demand was finally met. Now demand almost does not prevail over supply – all customers receive memory sticks on time and at the price at which they were bought.

Now, as far as one can judge, manufacturers are gradually increasing the output of new standard memory chips, so in the near future the situation may change even more, for the better for buyers.

What about memory chips of other standards?


There are fewer reasons for optimism here than in the case of DDR5. Memory, from DDR2 to DDR4, has risen in price throughout the year. Chips that are used in specific devices or have a small volume have especially succeeded in this. So, DDR3 with a capacity of 4 GB became more expensive immediately by 8.93%.

Last year, the cost of, for example, DDR4 with a capacity of 8 GB increased, however, by only 4%. 4GB DDR4 RAM costs 6.6% more. DDR2 1 GB in price has risen to a record high (yes, they are still being produced) – by 10.1% in just a month.

Some companies even began to resume the production of morally outdated chips, the cost of which increased the most. For example, Nanya and Powerchip Semiconductor Manufacturing Corp (PSMC) from Taiwan decided to convert part of the production to the production of DDR3 modules.

And Winbond, which supplies the vast majority of BIOS chips to the market, has also begun building an additional facility to manufacture DRAM chips.

Future prospects


At the moment, processors from Intel are the only chips that support DDR5. When AMD catches up in this regard, the demand for new standard memory strips will increase even more. Nevertheless, memory is being actively produced and supplied to the market right now, so the moment the demand starts to grow rapidly, the demand will most likely be met.

In general, we would like to hope that the current dynamics of prices for memory strips is the first sign of an improvement in the situation on the semiconductor market. The current dynamics, of course, can change dramatically tomorrow. But still, there is hope for an improvement in the situation, and not illusory, but quite real.

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