Long-term clients of mine, even those dating back to my decade at Dataquest in the 1990s, are familiar with the concept that spot prices behave differently during a shortage. When there is too much DRAM spot prices remain below contract prices, because OEMs who bought too much product clear their inventory at quarter end (and other times) by selling at a loss.
During a shortage the opposite is true: OEMS find that they can’t get as much DRAM as they wanted through their contract sources, so they shop for the balance on the spot market. Since there are more buyers than sellers, spot prices invariably raise higher than contract prices.
When the prices change from one state of affairs to the other then it is safe to assume that the market has changed from a shortage to an oversupply, or from an oversupply to a shortage.
Of course, there are periods of flux, where, for a day or two, or a week or two, spot prices indicate a change, but the real story is told when there is an extended change.
Lately we have noticed that DRAM average spot price per gigabyte has remained higher than contract prices. In fact, this has been the case for nearly one and a half months, longer than any time since the first half of 2013. This is illustrated in this post’s graphic.
This could be the beginning of the serious shortage that Objective Analysis has been forecasting for this period, however NAND flash, which should fall into synch with DRAM, is still seeing soft pricing.
Still, indications are that a shortage will indeed develop this year, and when it does Objective Analysis‘ clients will have taken measures to ensure that they will not be caught in short supply. We can only hope that those who are not currently engaged with us will have received similar advice from their market research providers.
2 thoughts on “Is the DRAM Market Entering a Shortage?”
Conveniently DDR4 (for Servers) is coming just around the corner while
PC’s growth is negative for last few years
and margins for ARM memory is quite low.
Even with 64 bit processing typical RAM has not increased
especially when Apple has added RAM compression in their OS.
Good enough computing is here where most of the computing
is suppose to occur in the cloud where networked or grouped memory is needed.
RD, thanks for the comment.
I don’t know how many times over the past 20+ years I have heard that DRAM per PC had stopped growing – I recall when that number was going to stop at 2MB.
Let’s hope it doesn’t stop growing quite yet! That would have a pretty disastrous impact on the DRAM makers!
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