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TrendForce Forecasts DRAM Contract Prices To Grow 8-13% In The Next Quarter

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Analysts at TrendForce have studied the current situation in the graphics DRAM market and concluded that demand continues to outstrip supply, and the gap between contract and spot prices is still very large. Based on this, analysts predict that contract prices for these products in the third quarter of 2021 will increase by 8-13% compared to the second quarter.

When it comes to spot prices, they were driven by the demand for video cards associated with the cryptocurrency boom. As a result, in some cases, spot prices were three times higher than contract prices. The fall in cryptocurrencies has caused DRAM spot prices to drop to roughly double the contract price. It is now expected that the demand for video cards from cryptocurrency miners will weaken before the next rise in the value of cryptocurrencies, so that in the third quarter the gap between contract spot prices will narrow further.

Analysts identify four factors driving further price increases for DRAM in the contract market.

First, demand in the PC market remains strong, especially for gaming products.

Second, the DRAM vendors’ manufacturing capacity allocated to most customers is limited by the fact that Nvidia is bundling its GPUs with graphics DRAM. This means DRAM vendors are prioritizing allocating capacity to Nvidia over smaller customers.

Thirdly, both the Xbox Series X and PS5 use 16 Gb GDDR6 chips, which differ from 8 Gb GDDR6 chips, that is, DRAM manufacturers cannot combine them within the same batch of platters. They have to allocate production capacity for only one type of microcircuit.

Finally, the resurgence in demand for server DRAM has prompted vendors to prioritize it as it is a more attractive product for them. With competition for manufacturing capacity, DRAM contract prices are expected to continue to rise.

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