The memory shortage problem is becoming increasingly serious. There are rumors in the market that Samsung Electronics has suspended DDR5 contract quotations in October, which may trigger other suppliers to follow suit. Inspired by this news, the stock price of Micron, a major US memory manufacturer, rose by nearly 5% again on the 3rd.
Barron's, StockStory and other foreign media reported that as the artificial intelligence (AI) craze sweeps the market, the demand for memory and storage hardware has surged. Signs of strong demand from South Korean competitors drove Micron's strength; Micron's stock price jumped 4.88% on the 3rd to close at $234.70, doubling in the past three months.
Sources indicate that due to the triple increase in spot market prices, Samsung Electronics has suspended the DDR5 memory chip contract price announcement originally scheduled for October and will postpone it to mid-November.
The rapid rise in spot prices while the contract pricing has not yet been announced shows that the memory chip market is in tight supply, which will increase the revenue and profits of memory manufacturers.
South Korean memory maker SK Hynix also recently released strong financial reports and said that it has sold out all its chip production capacity for the next year. The company pointed out that due to the surge in AI demand, DRAM chip production capacity may be limited.
Experts analyze that the DRAM market is mainly monopolized by the three giants Micron, Samsung and SK. Price fluctuations are like commodities. The accelerated growth of DRAM demand may push up the prices of all manufacturers, which is regarded as bullish news by the entire industry.
Industrial research organization TrendForce estimates that traditional DRAM prices will increase by 18% to 23% in the fourth quarter. Analysts pointed out that widespread news of Samsung suspending contract quotations and other suppliers adopting a wait-and-see attitude have fueled the bidding atmosphere and continued to push up DRAM prices.
Citi Research analyst Christopher Danely recently raised Micron’s target price from US$200 to US$240, citing the critical importance and supply shortage of DRAM, which is expected to become “the next chip type to win long-term contracts in the AI food chain.”