Memory prices may have bottomed out

If you’ve been considering a memory upgrade for your systems, now might be the time to do it. The lengthy decline of memory prices has nearly stopped, and while that doesn’t mean prices are going to go up just yet, it’s likely to happen down the road.

DRAM and NAND flash memory makers have had to endure a severe downturn in average selling prices over the past six months, as part of the typical cyclical nature of memory sales. But a new report by technology industry analyst firm TrendForce says price declines for some forms of memory have slowed to almost zero.

TrendForce credits the slowdown in price decline to a promise made by memory makers Micron, Samsung, and SK Hynix to reduce production due to oversupply. This covers both DDR4 and DDR5 memory, the former of which is slowly being phased out in favor of the latter. Whenever a new memory format is released, there is a switchover that takes place as old inventories are slowly burned off while the new inventory is ramped up.

That’s been happening for the memory makers as they switch to DDR5. The report said DDR4 would be in “oversupply” throughout the year and see price drops of between 3% and 8%. DDR5 is faring a little better since it is the new leading-edge memory technology, and TrendForce estimates prices falling between 0% and 5%.

Most of the damage is done. In Q1, the three memory makers all cut production after customers stopped buying for three consecutive quarters. This is due to a combination of stalled PC sales on the client side and a slowing in server sales due to the impending release of new processors from Intel and AMD.

Buyer inventories remain high, and the transition to new platforms has fallen short of expectations, TrendForce says. Despite the recent investment by cloud service providers in AI server equipment, there hasn’t been a significant reduction in server DRAM inventories.

Server sales tend to be cyclical: There are typically about 4 to 6 quarters of high sales, usually timed with the release of new platforms, followed by 4 to 6 quarters of slow sales as the new hardware is deployed. Right now, we’re at the tail end of the second half. Intel has been shipping Sapphire Rapids-era Xeons, and AMD has been shipping Genoa and Bergamo Epyc processes for a few months now, so they should be in the channel inventory.

Ultimately, TrendForce does not see an appreciable recovery in memory prices until at least next year. So, this would be a good time for some bargain hunting.