Author: Zhou Yuan / Wall Street Insight
Recently, the prices of AI memory have surged significantly, shifting market focus to the prices of DDR4 (Double Data Rate 4 SDRAM) / DDR5 or HBM3e capacity reservations, while few have noticed new changes in traditional DDR3 prices due to insufficient capacity.
Wall Street Insight recently learned from the supply chain that Nanya Technology and Winbond's DDR3 contract prices have risen by approximately 50%-100%.
These two companies are core suppliers of DDR3 memory (including DDR2) globally.
A marketing department representative from a major company in the DDR4/DDR5 or HBM3e sector asked Wall Street Insight in surprise, &#34;Is anyone still buying DDR3?&#34;
In fact, although DDR3 has been replaced by DDR4/DDR5, it is still widely used in &#34;mid-range and below office/home devices, and second-hand builds&#34; due to its large stock and low cost. For example, budget-constrained office computers and entry-level gaming consoles for students remain &#34;one of the mainstream memories&#34; in the current second-hand market.
Additionally, DDR3 is also widely used in embedded and dedicated devices, such as industrial control terminals, old set-top boxes, and low-end NAS (Network Attached Storage), where performance requirements are low but long-term stable operation is needed.
So why can DDR3, despite its poor performance, see prices nearly double?
Insiders told Wall Street Insight that the main reason is the demand driven by the AI accelerator card market, leading major memory manufacturers like Samsung, SK Hynix, and Micron to halt DDR3 production and some to expand DDR4 capacity, fully competing for capacity in the HBM3e (High Bandwidth Memory) and HBM4 fields.
Starting from the second half of 2024, the three major memory giants, Samsung, SK Hynix, and Micron, will continue to shift resources from their 12-inch wafer production lines towards DDR4 and HBM3e.
Samsung will redirect part of its DRAM capacity at the Pyeongtaek plant to DDR4 server memory production; SK Hynix will transform some production lines originally used for DDR3 into DDR4 lines; Micron will also significantly reduce the proportion of DDR3 capacity, reallocating that capacity for DDR4 and higher-spec products.
These capacity contraction measures have directly led to a sharp decline in the global monthly production of DDR2 and DDR3 memory.
The explosive growth in demand for DDR4 memory has become a key factor driving the industry's capacity shift.
In the consumer electronics sector, as laptop performance continues to improve, the requirements for memory read/write speeds and data processing capabilities have become increasingly stringent. DDR4 memory, with its advantages of high bandwidth and low latency, has been actively adopted by mainstream brands, significantly increasing the proportion of laptop models equipped with DDR4 memory. Mainstream brands only use DDR3 memory in a small number of entry-level models and plan to fully switch to the DDR4 platform.
In the server sector, the rapid development of cloud computing businesses, especially AI-related businesses that have an extreme demand for computing power, has led to a surge in the demand for high-capacity DDR4 or HBM3e memory in servers, with a significant increase in procurement volume, extended order cycles, and some companies even signing &#34;minimum purchase volume&#34; agreements to secure capacity
At the same time, HBM3e, as the core storage component of AI servers, is experiencing exponential growth in demand.
With the explosive growth of application scenarios such as training large AI models and high-performance computing, AI servers have sharply increased their requirements for memory bandwidth and capacity. HBM3e, with its high bandwidth, low latency, and close collaboration with GPUs, has become the top choice for AI servers.
It is worth noting that the market demand for DDR2/DDR3 memory has not declined in tandem with the contraction of production capacity.
In the industrial control sector, products such as textile machinery, smart meters, and rail transit signal equipment still highly rely on DDR3 memory due to their long product life cycles.
From the perspective of automotive electronics, some older vehicle models still use DDR3 memory in their in-car entertainment systems, and the rising procurement costs of memory are putting pressure on related companies. Additionally, in emerging markets such as Africa and Southeast Asia, there is still stable demand for entry-level laptops equipped with DDR3 memory, further exacerbating the supply-demand imbalance of DDR3 memory.
From the perspective of the industrial chain transmission effect, the rising prices of DDR3 memory have already had a significant impact on downstream companies.
In the security monitoring field, the production costs of products using DDR2 memory have increased, and leading companies have launched alternative models equipped with DDR4 memory, but the inventory digestion of older products is facing pressure.
It seems that the supply-demand imbalance in the DDR3 memory market is unlikely to reverse in the short term.
On the supply side, giants like Samsung and SK Hynix have clearly stated that they will continue to focus on expanding DDR4 and HBM3e production capacity, with no plans to restore DDR3 production capacity; while Nanya Technology and Winbond Electronics are currently the main suppliers in the DDR3 market, their production capacity is limited, and they need to balance their own DDR4 production capacity planning, making it difficult to fill the capacity gap left by leading companies.
On the demand side, the demand for DDR3 memory in industrial control, automotive electronics, and other fields will continue for some time and cannot be completely replaced in the short term.
For companies in the industrial chain, a differentiated strategy is needed to respond to current market changes.
Large enterprises can accelerate product upgrades, replacing DDR3 memory with DDR4 to reduce reliance on traditional memory; small and medium-sized enterprises can lock in costs through &#34;centralized procurement + long-term contracts&#34; while exploring deep cooperation with suppliers like Nanya Technology and Winbond Electronics to strive for priority supply rights

SSNGY

- Recent price increases for DDR3 memory, driven by supply shortages, have gone largely unnoticed amid the focus on DDR4, DDR5, and HBM3e.  
- Major suppliers like Nanya and Winbond have raised DDR3 contract prices by 50%-100%, despite its declining relevance in the market.  
- The demand for DDR3 remains strong in sectors like industrial control and automotive electronics, indicating a persistent supply-demand imbalance that is unlikely to reverse soon.

Track Hyepr | Old memory contract quotes soar: What's the reason?