DRAM contract price decline in the first quarter of 2019 expanded to nearly 20%
According to the survey, in December 2018, during the European and American years, the DRAM volume was light, so it was not included in the contract price calculation, which means that the December contract price was roughly the same as that in November. The average price of the mainstream module 8GB is still around 60 US dollars, while the 4GB is about 30 US dollars, but the lowest price of the two modules has fallen below the 60 and 30 US dollars.
In the first quarter of 2019, the contract price was negotiated in December last year. The overall inventory is too high, the demand is weaker than the original estimate, and the short-term economic outlook is uncertain. The average price of the buyers and sellers has dropped to 8 US dollars. Or a lower consensus, it is expected that the contract price in January will fall by at least 10% from the previous month, and the possibility of continuous exploration in February and March is extremely high. Overall, the price decline in the first quarter will be expanded from the original estimate of 15% from the previous quarter to nearly 20%, especially in the case of server memory.
At present, the biggest problem in the DRAM market is not the increase in the supply side, but the demand side entering the off-season in the fourth quarter of 2018, making the inventory climb problem emerge early. In the fourth quarter of 2018, among all the suppliers, the price reduction of Micron was the largest, so some of the high stock levels were able to be timely. The Korean factory has contracted its shipments because of the small price cuts, and the inventory continues to accumulate in the first quarter of 2019. In the short term, the supply bit growth will continue to be greater than the sales bit growth, and the inventory level will continue to rise, becoming the biggest pressure on prices. It is expected that the DRAM price decline from the fourth quarter of 2018 will probably last for more than four quarters.
Module factory profit space is compressed
Although DRAM prices have started to fall since the second half of 2018, due to high industrial concentration, price-cutting competition will only erode current lucrative profits. Therefore, in 2019, factories plan to reduce capital expenditures to stabilize DRAM prices and balance market supply and demand. surroundings.
It is worth noting that the upstream factory enjoys high gross profit, but the profit space of the downstream memory module factory and customers has been compressed, which makes the overall memory industry profit performance in 2018. In 2017, due to the sharp rise in DRAM prices in the short term, the module factory benefited from the low-priced inventory held in the hands and turned into actual profit. Most of the module factories performed very well. However, since 2018, the price of DRAM has been at a high level, and the profit margin of the pellet spread has become smaller. The module factory can only benefit from the processing cost. In addition, DRAM prices began to fall in the second half of the year, and the loss of inventory held by downstream module manufacturers was dragged down. Many downstream manufacturers’ actual profits in 2018 were only 10% lower than the previous year, and even started. Loss. Therefore, it is expected that the survival of the module factory in 2019 will face a more severe test.