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Demand is below supply: NAND and RAM prices are falling

The shortage of chips and microelectronics appears to be coming to an end. According to TrendForce, as early as mid-2022, the global NAND market will reach a supply-demand balance.

According to the company's forecasts, already in the 3rd quarter of 2022, the NAND market will be saturated enough for price growth to stop or even go down. The same story is happening with RAM, which has been getting cheaper since the beginning of this year.

However, the reason lies not in the growth of production, but in the reduction of demand in all directions.

Due to disrupted supply and manufacturing chains caused by the COVID-19 pandemic and other factors, solid-state memory for SSDs has been steadily rising in price over the past two years. The same thing happened with RAM all this time. The situation was aggravated by the increased demand for electrical goods, personal computers and other devices, the demand for which has grown due to the transition of a huge number of people to remote work.

Now, in the conditions of actively growing inflation and general geopolitical uncertainty, consumption has decreased on all fronts. The oversaturation of the market with NAND memory is associated, first of all, with a drop in demand for smartphones, as well as for laptops and other equipment. Rising prices across the board and the current crisis are forcing people to put off shopping outside of the essentials category.

The same story happens with RAM: a drop in demand with the same production volumes. However, for fans of personal computers and powerful configurations, this is good news. Memory is getting cheaper throughout 2022, both server and consumer. The average drop in value is up to 5-8% per quarter, and some consumer positions, previously sold at speculative prices, are now significantly cheaper.

First of all, this applies to DDR5 memory, which since its release has been significantly more expensive than the corresponding DDR4 memory kits. Now, prices for two generations of memory have reached parity, and this will greatly facilitate the migration of users from old platforms to new configurations. This is especially important in anticipation of the release of AMD processors on the Zen 4 architecture and Intel processors on the Intel4 architecture by early 2023.

The fall in demand will have a positive impact on the cost of video cards. Of course, the main influence on the cost of graphics accelerators is now having a falling rate of bitcoin and other cryptocurrencies, however, the cost of graphics DRAM also matters. According to forecasts, this element of video cards will fall in price up to 5% only in the next quarter, which will positively affect the final cost of Nvidia products and the Radeon brand. The same conclusions apply to server memory.

Michael Zippo
[email protected]

Sources: Python.Engineering, TrendForce

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