Incoming price correction of DRAM memory warned by fourth largest manufacture

At the moment, there is a worldwide graphics chip shortage due to the rise of cryptocurrency mining and excess building of rigs requiring tons of chips. Warehouses and manufacturers are trying hard to cope with extra demand to meet the shortage. Each year, we also struggle to find sufficient memory chips, which drives its price and availability. The chip and memory market has a vast customer base as more tech companies are on the rise, remote workers building home-based workstations.

The world’s fourth-largest DRAM memory maker, Taiwan’s Nanya Technology Corporation, predicted price correction in the last quarter of 2021 (Q4). The event hosted by Nanya Technologies took place on October 8, an investor conference call. Speakers present at the event was President Dr Pei-Ing Lee, Executive VP, Dr Lin-Chin Su and Financial Executive Philip Jao.

Third business quarter 3Q21E generated NT$ 23,837 million in revenue, a 5.3 per cent increase from the previous quarter. The average selling price increased by 20 per cent, but NTD received a negative impact on revenue by 0.6 per cent.

Serves, consumer electronics, computers, smartphones, Chromebooks, TVs now require more memory than ever, and manufacturers are competing against themselves to provide more memory in their specs. Which in one sense is excellent, but the COVID-19 stock shortage, transportation blockage and company regulations were the real culprits behind the temporary price bump.

Though the price “correction” can benefit consumers, it may be different for stakeholders and investors. In a report published on DRAM exchange, the NAND flash market will see failing quotes and 0-5% QoQ declines, according to TrendForce.

Currently, demand is low for several types of memory chips, which may cause high inflation and geographical tensions: overall temporary economy crackdown. Nanya Technology is right behind Samsung, SK Hynix and Micron in manufacturing capacity or overall market shares, making it the fourth largest memory maker. The pandemic interruption caused severe damage to the market flow, taking companies of grand scale unexpected time for global economic recovery. The mobile market with new 5G modules is seemingly an exciting trait of today’s tech, along with the server market DRAM demand growing for 8-channel, 64GB RDIMMs.

Consumer products such as smart speakers, SSD, wearable and networking equipment are highly profitable components for the memory makes while DTV and automotive demand are also growing, causing a temporary shortage of parts.

Nanya business review improved with 49% growth in GM and 38% in OPM along with 1st 10nm-class 8GB DDR4 and DDR5 on schedule. Lee said the company is “expanding the DRAM market”, and minor correction is needed.

Samsung’s Austin foundry shut down during February due to lockdowns, but the company hit record-breaking group revenue during that time. Memory prices are jumping back to normal, but the demand remains for faster chips. Gartner last month published a memo where they predicted “a significant price reduction” due to oversupply.

COVID-19 restrictions are gradually lifting from Europe and North America due to the rise of vaccination rates. As a result, schools, colleges and offices are also coming back to regular operation. It causes demand for laptops and computers; in other words, memory demand rises among other components. We are not hopeful that the graphics chip shortage will expire anytime soon, but we can indeed say there will not be any memory shortage.

NAND flash wafer prices are decreasing quarterly from 10-15% as demand for significant applications is subsided. Second-quarter 2Q21 was a sluggish year for memory chips such as flash drives and memory cards, but we can call it a successful exacerbation in the pandemic times.

The gross profit for Nanya Tech Corp was NT$26,481, and earnings per share also increased. Memory is one of the expensive parts of computing systems. Still, due to its potential and value “correction”, we might find cheaper memories or companies becoming generous with memories in their products.