DRAM Prices Could Plummet 40 Percent In 2019 On Erroneous Semiconductor Forecasts And A Perfect Storm

If you're a semiconductor manufacturer pumping out DRAM and NAND for today's hordes of electronic devices, you might be sitting in a corner crying right now. But for us enthusiasts that need to purchase DDR4 modules and PCIe NVMe SSDs for our gaming rigs, the closing months of 2019 might be a prime opportunity to make new purchases.

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The semiconductor industry is staring down the barrel of a 9.6 percent decline in revenue for 2019, taking totals for the year to $429 billion versus $475 billion during all of 2018. To put that in perspective, it was forecast that revenue for the year would only be down by 3.4 percent, but a perfect storm of variables has turned those projections upside down.

As we reported last week, the smartphone market is expected to experience its biggest drop ever in 2019 as feature stagnation and consumers’ desire to stick with their devices longer take root. Gartner forecast that sales are expected to tumble 3.8 percent in 2019. In addition, the consumer PC market – desktop and notebooks -- is expected to see a drop from sales of 195 million units in 2018 to 187 million in 2019.

Gartner today is adding in that the ongoing U.S.-China trade dispute is having a dampening effect on new purchases of PCs, servers and smartphones. When you combine those factors with some woefully inaccurate sales forecasts by the semiconductor industry, and a slow rebound for the hyperscale computing market, we're looking at the potential for DRAM prices to free-fall by 42 percent in 2019.

The oversupply in the semiconductor market is expected to extend into the first half of 2020, which is good news for enthusiasts.

“We expect that high smartphone inventory and sluggish solid-state array demand will last for a few more quarters,” said Gartner principle research analyst Ben Lee. “Given the aggressive price declines for NAND, it is possible to see a more balanced supply/demand outlook in 2020."

Tags:  NAND, DRAM, semiconductor