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Components

What’s the Deal with Computer RAM Prices?

by Adam Lovinus August 31, 2016
by Adam Lovinus August 31, 2016 5 comments 2059 views

The cost of desktop computer RAM (DRAM) has been on the rise since June, jumping up 20-30% over the summer on many SKUs, and affecting all brands of desktop memory. On average, a 16 GB kit of DDR4 that sold for around $52 in the beginning of June now has a price tag of $64—an unusual spike given the dramatic downward trend for computer memory during the past two years.

What’s behind the price hike? It’s a variety of market forces according to the experts.

On the supply side, a power outage in Korea is blamed for Samsung Electronics scrapping between 30K-50K DRAM wafers, according to an August 19 DigiTimes report.

Before that, there was a June 17 explosion of a power station in Xi’an, Shaanxi province, in northwest China, near a Samsung Electronics Flash memory fabrication plant. The Samsung Xi’an plant is one of the largest producers of 3D-NAND Flash memory in the world; DRAM wafers are not produced there, but it was enough to stir the market.

Samsung is one of three major DRAM manufacturers worldwide; it leads with 45% of the market share, with Korean SK Hynix at 25% and US-based Micron at 11%, and a few Taiwanese companies battling for scraps.

“That explosion was the trigger point,” says Anthony Kuo, director of Newegg product management. “Manufacturers use these kinds of events to drive the market, and it set off the perfect storm.”

Following the blast, price increases occurred across the board in the computer RAM market. “SODIMM, desktop PC memory, DDR3, DDR4—all memory SKUs went up after to the explosion,” confirms Kuo’s associate Alan Sun, Newegg’s memory product manager.

“The Perfect Storm”

In reality, Kuo points out, power outages do little in the grand scheme of DRAM supply. Manufacturers make decisions three months out or longer about the types of wafers they produce. With the two-year decline of desktop computer RAM prices, they shifted production towards DRAM for mobile devices (LPDDR4), and ramped up on server memory. “That’s where the money is for DRAM right now,” says Kuo, “mobile and server.”

Smartphones already on the market, such as the Asus Zenfone 2 for example, have 3 GB of LPDDR4 built in. New flagship mobile devices like iPhone 7 and Samsung Galaxy Note 7 will launch in Q4 with 2-4 GB of mobile DRAM on board; new Chinese handsets from Huawei, OPPO, and Vivo may even pack as much as 6 GB of LPDDR4.

Industry analyst Avril Wu of DRAMeXchange says Samsung started shifting production away from desktop DRAM in 2015 and into mobile RAM fabs. The company got a jump on Micron and SK Hynix; both busy transitioning to producing smaller 20 mm DRAM wafers for PCs at the time, and they are expected to make up ground by shifting DRAM production to LPDDR4 in the near term.

When will computer RAM prices level off?

“So far I’m hearing that things should stabilize in the middle of Q4,” Sun says. That coincides with the Thanksgiving season when vendors fuel the holiday retail push with funding for discounted products. “Memory prices should be stable by then, but the promotions might be affected.”

That’s only if the market justifies DRAM production, which it might not—Gartner is predicting a NAND shortage, and it may last well into 2017. The demand imposed by data centers moving to Flash storage, and new smartphone handsets with  256 GB Flash storage drives, stand to make NAND production more profitable for manufacturers.

Most Micron and Samsung fabrication plants are DRAM/NAND interconvertible, and refitting and retooling them takes about a month. These decisions will depend on where the market sits for both technologies in the coming months. In the longer term, Samsung is more capable of expansion to accommodate demand for DRAM and NAND wafers than Micron, which has experienced cash flow difficulty in recent years.

What does this mean for businesses and consumers? The scenario makes leveling of computer RAM prices an optimistic market view in the near term; and suggests now is the time to make SSD storage purchases in anticipation of rising NAND costs in the coming months.

Adam Lovinus

Adam Lovinus

A tech writer and Raspberry Pi enthusiast from Orange County, California.

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Summary
What’s the Deal with Computer RAM Prices?
Article Name
What’s the Deal with Computer RAM Prices?
Description
Computer RAM prices have been on the rise since June, what is driving up the costs? Explosions and power outages are the tip of the iceberg.
Author
Adam Lovinus
category17desktop memoryramserver memory
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Adam Lovinus
Adam Lovinus

A tech writer and Raspberry Pi enthusiast from Orange County, California.

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5 comments

Avatar
Sergey Vakulchik December 6, 2016 - 10:52 am

“…now is the time to make SSD storage purchases in anticipation of rising NAND costs in the coming months.”
Now is when? Would be nice if there was a date of publication. I read this on December 12, 2016 and was whis written month ago , 2 months ago or 2 days ago and don’t know. Doesn’t make much sense without date stamp.

Reply
Adam Lovinus
Adam Lovinus December 6, 2016 - 10:55 am

Hi Sergey, I wrote this 8/31/2016 — the stamp is below the main image before the start of the main text. You don’t see it?
Also, are you from the future?

Reply
Avatar
Mell January 2, 2017 - 10:48 am

RAM prices are even higher now… Specially SODIMMs, I’m wondering when all this will stabilize…

Reply
RAM prices are on the increase, with no relief in sight until later in 2017 January 31, 2017 - 2:01 pm

[…] Newegg’s Business blog first reported the beginning of an upward trend in a post on August 31. At that point, the price of a 16GB kit of DDR4 RAM had risen from close to $52 in June to $64 at the end of August. That was the first sign that the previous trend of lower prices was starting to reverse itself. […]

Reply
Avatar
Aprender a usar August 18, 2017 - 9:45 am

I think this will never change, remain expensive and out of standard. Thanks for the content sam

Reply

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