Starting next quarter, DDR3 will begin to face supply tightness, driving prices higher.
The world’s three major memory manufacturers, Samsung, SK Hynix, and Micron, are all aggressively targeting the new markets of High Bandwidth Memory (HBM) and DDR5, investing their new capacities in these products and neglecting the DDR3 DRAM market, which is used in legacy applications. With the recent surge in demand from AI and networking, DDR3 is experiencing a supply shortage, leading to rising prices. Winbond (2344) has fired the first shot at raising prices, with an anticipated increase of up to 20%.
Analysts are optimistic that Winbond’s significant price hike for DDR3 will not only benefit Winbond’s fundamental trends but also provide an opportunity for other DRAM suppliers like Yuchuang and King Core to follow this upward trend and benefit from it.
Industry insiders analyze that AI has become a mainstream market this year, driving a surge in HBM demand, even to the point of supply not meeting demand. Due to their relatively high prices and profits, Samsung, SK Hynix, and Micron are actively investing in HBM production, focusing their main capacities on the latest DDR5 market opportunities, while choosing to maintain their pre-reduction capacities for older specifications of DRAM like DDR4 and DDR3, and even gradually phasing out the DDR3 market.
As the world’s three major memory manufacturers are unable to focus on the DDR3 market, with a large number of end markets such as IoT, networking, and automotive still using older specifications like DRR3 or DDR4, and with the introduction of AI technology, there is a demand for capacity upgrades for DDR3 in end products. With demand surging and no increase in manufacturers’ supply capacities, the DDR3 market, after completing inventory destocking last year, is expected to start facing supply tightness and price increases from the second quarter of this year.
Industry sources indicate that Samsung, Micron, and SK Hynix have been progressively raising DDR3 prices since the fourth quarter of last year and the first quarter of this year. Winbond is planning to raise DDR3 DRAM prices in the second quarter by a significant 20%, becoming the first Taiwanese supplier to implement a large-scale price increase.
It is understood that DDR3 is now a niche memory product, mainly used in end products like networking, IoT, or wearable devices. Although DDR4 demand is gradually rising, DDR3 remains the main niche memory product on the market. With the end market heating up recently, this has become another major reason for the tight supply and increasing demand for DDR3.
Winbond’s General Manager, Chen Peiming, previously stated that he expects the DDR3 market to reach a supply-demand balance or a slight supply shortage in the second or third quarter, which would help the price rise trend and benefit Winbond’s operations, which heavily rely on DDR3.
Winbond announced in 2022 that it would continue to expand its DDR3 product line and expects to produce DDR3 for the next ten years, including LPDDR3 and 1Gb to 4Gb DDR3 products, applying them in AI accelerators, IoT, automotive, telecommunications, WiFi 6/6E, and fiber optics, among other applications. Winbond’s revenue from DRAM still maintains a majority share, with DDR3 as the bulk of it.
DDR3 and DDR5 each have their distinct features
DDR3 is one of the most common types of memory currently, with a transfer rate ranging from 800 MHz to 2133 MHz. Compared to DDR3, DDR4 improves transfer rates and bandwidth, reaching up to 3200 MHz, and also achieves lower voltage and power consumption. Meanwhile, DDR5 is the latest type of memory, offering higher transfer rates and bandwidth, capable of reaching a transfer rate of up to 8400 MHz. It also supports higher capacities, greater bandwidth, and enhanced data integrity.
DDR3, being one of the most common memory types, has a transfer rate ranging from 800 MHz to 2133 MHz. DDR5, the latest memory type, provides higher transfer rates and greater bandwidth, with transfer rates reaching up to 8400 MHz.
DDR3:
- Speed and Bandwidth Improvement: DDR3 provides a significant improvement in speed and bandwidth over DDR2. With higher internal clock speeds and faster data transfer rates, DDR3 offers enhanced data transfer performance.
- Low Power Consumption: Operating at a lower voltage, typically 1.5V, DDR3 consumes less power and generates less heat, making it advantageous for devices where battery life and cooling are critical.
- High Capacity Support: DDR3 supports larger memory capacities, essential for applications and tasks that process vast amounts of data, such as graphics processing, video editing, and virtualization.
- High Frequency and Timing: The frequency range of DDR3 memory typically spans from 800MHz to 2133MHz, allowing for various frequency options based on needs. Additionally, DDR3 introduced stricter timing requirements to ensure stable and reliable data transmission.
- Backward Compatibility: While DDR3 memory slots are generally incompatible with DDR2 or DDR, DDR3 memory modules can be used on DDR3-compatible motherboards alongside older DDR2 or DDR slots. However, the memory modules will operate at lower speeds and timings to accommodate the lower standards.
DDR5:
- Higher Speeds and Bandwidth: DDR5 memory offers higher internal clock speeds and data transfer rates, providing greater bandwidth. The transfer rates of DDR5 can exceed 6400MT/s, more than doubling the maximum transfer rate of DDR4.
- Increased Density and Capacity Support: DDR5 supports larger memory capacities and higher densities compared to DDR4. With larger chip capacities and support for more channels and slot configurations, DDR5 can offer more storage space.
- Reduced Power Consumption: DDR5 operates at a lower voltage, typically 1.1V, compared to DDR4’s 1.2V, contributing to lower energy consumption and reduced heat generation.
- Stricter Timing Control: DDR5 introduces stricter timing controls to ensure stable and reliable data transmission, offering improved performance and signal integrity through finer timing control.
- Enhanced Error Correction and Reliability: DDR5 includes new error correction and reliability features, such as row-level and column-level error correction (RAS and CAS). These features enhance data integrity and reliability, reducing the risk of system crashes and data corruption due to memory errors.
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