Memory Prices Slow as Buyers Reach Ceiling
Memory prices are finally slowing down, and the reason is not increased supply—it’s that buyers have run out of money.
According to TrendForce, conventional DRAM contract prices are expected to rise 13% to 18% quarter on quarter in Q3. Dan Robinson reported this forecast for The Register, backed by European shipment numbers.
While this growth rate seems modest compared to recent trends, it’s significant: Q2 saw a 59.5% jump in DRAM industry revenue, reaching $154.73 billion.
Why the Slowdown?
TrendForce attributes two main factors to the slowdown:
- Shifting demand: There’s a move away from high-capacity RDIMMs towards lower-capacity parts.
- "Limited ability of PC and smartphone customers to absorb further price increases": Market saturation is hitting a ceiling, not reaching equilibrium.
Supplier inventories remain at historic lows, and bit shipments are only expected to grow modestly. Despite these factors staying constant, prices are rising more slowly because buyers cannot afford any more.
Europe Bears the Brunt
Context expects severe drops in European PC shipments as high component costs increase system prices:
- Laptop shipments are projected to decrease 6.4% year over year in Q3, then 20% in Q4.
- Desktop shipments are anticipated to drop around 20% in Q3 and nearly 30% in Q4.
These numbers highlight the direct impact on a mature market: as memory prices increase, European buyers are delaying PC replacements. Corporate buyers are extending refresh cycles and only purchasing when essential, according to Context’s senior analyst Marie-Christine Pygott.
Profits Over Volume
Despite the drops in volume, PC manufacturers are not suffering financially. Higher prices have more than offset the lost sales. Lenovo, for example, successfully navigated the memory crisis by pushing customers towards premium devices, increasing profits at the expense of volume sales. This logic applies to other manufacturers as well—if selling fewer, more expensive machines generates higher revenue, there’s little incentive to focus on volume.