Contract prices of server DRAM are expected to drop by more than 20 percent quarter on quarter in Q1 2019, according to DRAMeXchange, a division of TrendForce.
The demand outlook is weak due to high inventory levels, seasonal headwinds and the China-US trade war.
Mark Liu, senior analyst at DRAMeXchange, said DRAM suppliers’ fulfillment rate has improved from 90 percent in Q4 2018 to 120 percent in Q1 2019, indicating an oversupply in the market.
Major data centers operators in North America are holding high levels of server memory inventory that can cover the usage for at least 5 to 6 weeks, while OEMs’ current inventory can cover around 4 weeks.
Demand for the server DRAM from the upgrade to Intel’s Purley platform has started to wear off. Data centers and other server DRAM clients are anticipating drop in prices and less keen on stocking up on memory components.
Major DRAM suppliers plan not to expand their production capacity actively this year. They also slow down the migration to advanced processes and high-density chips, trying to offset the oversupply.
The demand for servers will recover from Q2 2019, with increased shipments to Chinese data centers and branded server makers worldwide. If the inventory problems are properly solved, server DRAM price decline may be moderated in Q3 2019 and Q4 2019, bringing the annual price fall to almost 50 percent.