The memory chip sector has a long list of pain points that factor into its unpredictable future in the next quarter and beyond. Some market trends indicate demand will soften, while others show if the previous climate is any indication, then shortages could persist through 2022.

From factory fires, natural disasters, COVID-19 and raw material shortages, the following events are just a few hurdles factoring into today’s memory market volatility:

  • Fires at Nittobo (2020) and Renesas (2021) factories worsen already deteriorating supply of substrates necessary in memory module production. The disruption caused a price increase of 5-10% in the memory sector.
  • An ongoing drought, another wave of COVID-19 and geopolitical tension with China have wreaked havoc in Taiwan. Micron, one of the lead memory makers, has a memory chip facility there and is seeing spikes in production costs due to a reduced water supply.
  • A winter storm in Texas (2020) caused widespread power outages and blackouts at multiple chipmakers including Samsung and Infineon. Both companies report price increases on NOR flash chips as a result. This storm also further hinders Samsung’s memory sector production, which is already behind schedule with the rise in demand for 5G.
  • The blockchain, Chia, which was released in April, joins other popular mining platforms in the current cyrptomining craze. Chinese markets have been in a frenzy with the release while memory chipmakers see another source of supply chain calamities since farming requires memory modules already in tight supply.
  • The amassing shortages of wafers and ICs are pushing manufacturers to issue incoming material to the 32 and 64GB higher capacity modules that are more profitable. This is causing the lower capacity 16BG modules to go short in the market and is even starting to affect the higher capacity modules. The uptrend happening in the market could cause shortages of modules of all capacity at this rate.
  • Spot market prices for server DRAM memory has shown a sudden rise this quarter amid speculation over a batch defective wafers produced by SK Hynix. To add to this debacle, there are rumors that SK Hynix is not allocating any modules (which includes DRAM modules, RDIMMS, SoDIMMs and UDimms) to franchise distributors because of possible yielding issues. This will affect upcoming allocation of modules and is likely going to add to the strain in the market going into Q3 and Q4.

The overlap of these events is causing a surge in memory module prices. Components like DRAM and NAND memory chips have been fluctuating in price since the beginning of FY21. In Q1, DRAM prices went up 70-80%, then increased an additional 20-25% in Q2. The next quarter and Q4 could see a 10% decrease in prices, but that might be wishful thinking amid growing demand and continued hurdles manufacturers need to jump over.

As erratic as the prices in the memory sector appear, there is a cyclical nature to the increases. Consumer electronics manufacturers, the gaming industry, IT sectors, and emerging data centers each rely on memory modules in some shape or form, which means there’s constant demand. The fast-paced nature of each industry with electronic advancements, new product releases and emerging technologies will feed into the cycle of growth and demand for memory manufacturers.

Recent market intelligence shows the shortages could continue until 2022 based on supply constraints affecting the current state of the memory sector. Manufacturer capacity will remain tight with current widespread factory shutdowns in Southeast Asia due to COVID-19, adding to lead times that have already been extended due to the aforementioned market hurdles. Already, some memory module prices are expected to rise 3-8% in Q3.


Let Fusion Worldwide solve your supply chain needs.

EMAIL: GIVE US A CALL: +1.617.502.4100