Standard DRAM (dynamic random access memory) prices remain high after doubling in just one month, as speculation grows that Chinese manufacturers are phasing out production to prioritize AI chips and strengthen the country’s semiconductor self-reliance.
Demand for high-bandwidth memory (HBM) in AI, manufacturers shifting production to DDR5 and HBM, and strategic inventory building by producers and consumers are driving up DRAM prices. These shifts have tightened supply for older formats like DDR4, pushing prices even higher.
In June, prices for 8-gigabit DDR4 DRAM rose to around $4.12 per unit, while 4-gigabit DRAM climbed to about $3.14. Both doubled from May, marking the third straight month of gains, Nikkei Asia reported on Tuesday.
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Prices for 4-gigabit DRAM hit their highest level since July 2021. DRAM makes up about 60% of the overall memory chip market, as per a Chosun Daily report.
In terms of market share, data from Counterpoint Research on April 9 indicated that SK Hynix secured 36% of global DRAM revenue, marginally surpassing Samsung Electronics (OTC:SSNLF), which held 34%.
Micron Technology (NASDAQ:MU) has also garnered positive attention in this evolving landscape. On June 26, Bank of America analyst Vivek Arya upgraded Micron’s rating, citing improving DRAM trends and the ongoing ramp-up in HBM production.
Micron holds a unique position as the sole pure-play U.S.-based memory company and ranks as the third-largest global supplier of memory chips, encompassing both DRAM and NAND.
Arya highlighted Micron’s expanding opportunities within the AI sector, noting that the company’s chips are integral to key innovations in artificial intelligence, 5G, machine learning, and autonomous vehicles.
However, he cautioned that ongoing challenges related to NAND pricing and initial startup costs continue to cloud longer-term visibility for the company.
Despite these caveats, Micron’s stock has demonstrated robust performance year-to-date, surging over 28% and significantly outperforming both the Nasdaq Composite and S&P 500, which have each yielded returns of 8-9%.
This rally has been primarily fueled by strong demand for Micron’s memory chips, particularly its High-Bandwidth Memory (HBM3E), a critical component in AI accelerators such as Graphics Processing Units (GPUs) and Application-Specific Integrated Circuits (ASICs).
Micron is a key supplier of HBM3E for Nvidia’s (NASDAQ:NVDA) Blackwell and Rubin GPU lines, in addition to serving other GPU and ASIC clients.
The broader semiconductor market is experiencing a resurgence, with valuations across the sector benefiting from this recovery and concerted U.S. government efforts to strengthen the domestic chip industry.
Experts project that semiconductor investment will rebound by 7% this year, reaching an estimated $135 billion, as suppliers accelerate the production of advanced chips to meet the escalating demands of generative AI.
This anticipated increase marks the industry’s first such rise in three years, underscoring the pivotal role of AI-related chip demand in driving the recovery, as reported by Nikkei Asia on Tuesday.
Price Action: MU stock is trading higher by 0.67% to $108.49 premarket at last check on Tuesday.
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