TAIPEI -- The average contract price of DDR3 4GB modules fell 10% sequentially in October to $16.75 on slower notebook sales, TrendForce says.

The lowest contract price in the market is currently at $16.5, the research firm added

Monthly and quarterly contract prices dropped as the outlook of the notebook market has become more conservative after the peak season. Fourth-quarter notebook shipments are expected to contract by 1% quarterly, and this lack of end demand has resulted in excess DRAM inventory for PC OEMs. Moreover, DRAM suppliers are now producing on the advanced 20/21 processes and thereby increasing the overall DRAM supply. Consequently, average contract prices for all DRAM modules fell through the US$17 floor in October as the market favored buyers.

The decline of DDR3 4GB module’s average contract price has exceeded 40% this year, falling from $29.50 to the $16.75, according to Avril Wu, assistant vice president of DRAMeXchange, a division of TrendForce. The contract prices of DDR3 4GB modules will continue to fall as the global economy will remain sluggish until the middle of 2016, the firm added. Rather than scaling back production, top DRAM suppliers Samsung and SK Hynix will expand capacity to head off China’s efforts to create a formidable “Red Supply Chain” for its memory industry. Though increasing capacity will result in short-term price fluctuations and even declining profits, this action is necessary to retain market shares and raise the competitive barriers against potential rivals.

The average contract price of 4GB PC DRAM modules increased over 20% between September and October, from $14.5 to $17.5 as DRAM suppliers completed fourth-quarter contract negotiations with first-tier PC OEMs. Spot prices of DDR3 and DDR4 4Gb chips also rose 17% to 24% respectively in October compared with the prior month to $2.46 and $2.48 on average. This strong showing indicates that the DRAM market outlook is rosy and further price increases are expected in the future.

“From the supply side, PC DRAM currently accounts for less than 20% of the total output from the global DRAM industry because suppliers are focusing on the mobile and server DRAM markets,” said Wu. “From the demand side, branded device makers have fairly low DRAM inventories while facing higher-than-expected demand in the busy season. Hence, prices of PC DRAM have risen sharply in the recent period.”

Wu also noted that a large price increase in the PC DRAM market that is not caused by a factory accident disrupting the supply is rare in recent years. Furthermore, the momentum in the PC DRAM market is pulling up prices in both the mobile and server DRAM markets during the fourth quarter.

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