China’s Huaqiangbei electronics wholesale market sees surge in memory chip prices

Huaqiangbei, home to the world’s biggest electronics wholesale market, is seeing a dramatic increase in the prices of memory chips and other storage products, which is expected to drive up the cost of consumer electronics goods such as smartphones, tablets and personal computers.\nThe increase, especially for large-capacity models, has been “astounding”, as some memory chips had doubled in price, said Cai Zhaojie, a vendor who sells and builds personal computers for enterprises and professional users in Huaqiangbei, located in the southern tech hub of Shenzhen.\nA 32-gigabyte DDR5 memory kit, which cost around 1,000 yuan (US$140) in September, sold for 1,300 yuan by mid-October when a client of Cai complained about the price increase. That same product now costs 1,799 yuan, according to Cai. These kits are high-speed memory components used in video gaming computers.\nDDR5 is a new generation of dynamic random-access memory (DRAM) chip, which functions as high-speed memory in PCs, smartphones and servers.\n“Because of this price hike, the number of clients planning to build new computers has decreased,” Cai said. “Some have postponed their purchase or opted for second-hand equipment.”\nCai said he had to explain to customers that the price increase was out of vendors’ control. “It’s making our business very difficult,” he said.\n\nThe increase reflected a rapid shift in strategy for manufacturers, as they focused more on supplying large-capacity memory products for enterprises involved in artificial intelligence projects. That means supplies for conventional memory products for consumer electronics have been squeezed.\nSome electronics manufacturers have warned their customers about the impact of rising memory product prices. In October, Chinese smartphone giant Xiaomi said the price surge in memory chips drove up the cost of its latest Redmi K90 handsets.\n“The cost pressure from the upstream supply chain has been directly reflected in the pricing of our new products,” Xiaomi’s smartphone business president, Lu Weibing, wrote on Chinese microblogging site Weibo.\nPrices of some DRAM chips jumped 171.8 per cent in the third quarter from a year earlier, according to a Reuters report, citing TrendForce data. DDR5 chip prices surged 30 per cent this week, according to the latest TrendForce data released on Wednesday.\nMemory chip prices had risen rapidly since the “golden week” break in October, according to a Huaqiangbei vendor surnamed Li.\n“I don’t expect prices to go down at any point this year,” Li said. “Maybe next year.”\n