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RAM stock is so high that prices are sinking

A study indicates that the RAM memory market is going through a stage of stock saturation, and that this is generating such marked pressure that the main manufacturers in South Korea are willing to cut prices to encourage both dealers and their major customers to buy.

As you may have imagined, this has generated a domino effect, that is, it has driven other manufacturers to lower prices and has shaped a scenario in which the price drop could continue throughout the remainder of the year. Only if there is a significant reduction in stock, a large increase in demand or a little of both, would we start to see a rebound in prices, but it is very unlikely that this will happen in the short and medium term.

Right now the only way that manufacturers have to stimulate the sale of RAM memory chips is to lower prices, a successful approach since in the end you can earn the same or even more by selling a larger quantity at a lower price than a smaller quantity at a higher price. Taking a look at the price movements that TrendForce has given in its latest forecast, we find that DRAM memory could fall between 13% and 18% in the third quarter of the year, figures that represent a clear rise compared to the original forecast, which stipulated a fall of between 8% and 13%.

Regarding the data for the fourth quarter of the year, we see that the original forecast has also changed, and that has gone from between 0% and 5% to 3%-8%. If these data are fulfilled, it is possible that from the first or second quarter of 2023 we will see a stabilization or a slight rise in prices, although in the end everything will depend not only on the market situation, but also on the measures that have been taken by the leading manufacturers of DRAM memory.

It is a very easy matter to understand, if these reduce production, which is most likely, it is clear that in the end that will accelerate the normalization of prices, and may end up contributing to the rally that we have mentioned. You must bear in mind that everything we have discussed applies to the general consumer market, so in principle the forecast focused on the professional DRAM market has not changed.

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