Suspend quotation! Current situation of storage market: price increase, hoarding, and reluctance to sell

Driven by the wave of artificial intelligence, the three major storage manufacturers are shifting more production capacity towards HBM, resulting in a reduction in production capacity for traditional storage products. The storage market has been experiencing price increases since October, with even greater gains in the spot market. As the three major manufacturers suspend DDR5 DRAM contract quotes, the supply in the storage market continues to be tight.
Three major original factories suspend DDR5 quotations
According to the latest supply chain news, Samsung Electronics has taken the lead in suspending the DDR5 DRAM contract quotation for October, triggering other storage manufacturers such as SK Hynix and Micron to follow suit. The resumption of quotation is expected to be postponed until mid November. Although the increase in storage contract prices for the fourth quarter has become a market consensus, the previous expectation was that the contract prices for the fourth quarter could be finalized before the end of October. However, Samsung has been reluctant to provide contract quotes and has directly informed downstream customers that there is "no stock to sell", resulting in a 25% surge in spot prices for DDR5 within just one week, with a quarterly increase of up to 30% -50%.
The popularity extends to SSDs, with SSD production lines such as Samsung, SK Hynix, and Kaixia operating at full capacity. Among them, the supply of high-capacity SSD products is particularly tight. The delivery time for 8TB SSD product orders has even been scheduled for the second half of next year. In September of this year, the delivery cycle of another type of non-volatile storage, Nearline HDD, has been sharply extended from several weeks to over 52 weeks.
The price increase has prompted the market to hoard goods. The latest report from TrendForce points out that there is a serious hoarding phenomenon in the DRAM spot market, where buyers place orders immediately upon receiving a quote, leading to a surge in spot prices. Despite the significant difference between the actual spot trading price and the official price, buyers did not hesitate and instead hoarded their goods. Driven by strong demand, the spot price of DDR5 chips has risen by 30% this week. The imbalance between market supply and demand is becoming increasingly apparent, and short-term supply issues have not yet been resolved.
Therefore, buyers are hoarding goods in advance to ensure stable supply by the end of this year and early next year. The core driving force behind this round of price increases comes from the impact of server storage demand, and the structural transfer of original factory production capacity to the server market. The supply of mobile, PC, and spot markets has already been affected, and the strong price increase of consumer NAND and DRAM has jumped out of demand factors. In the future, the tight supply and rising prices of DRAM and NAND in the spot market may become the norm.
The continuous price increase storage has been brewing for over a month. This round of price increase started in September, reached its peak in October, and remained hot in November. The pressure of sustained price increases is constantly spreading downstream, and memory modules and mobile phones have also entered the price increase channel.
On October 20th, Luo Feng, Vice President of iQOO, stated that the storage price increase has directly affected the pricing strategy of iQOO15, not only affecting the price during the new product launch period, but also affecting the product pricing strategy. The storage industry has gone through three cycles of price increases since 2016. The first upward cycle from 2016 to 2019 was driven by the accelerated penetration and technological upgrading of DDR4 memory, which continued to drive up storage prices. Although the shipment volume of terminal devices such as mobile phones and PCs did not significantly increase during the same period, high-performance applications represented by mobile games have rapidly become popular, significantly increasing the demand for memory bandwidth and capacity in terminals, thereby driving downstream manufacturers to rapidly increase the adoption rate of DDR4 memory and driving its penetration rate in the mainstream market to rise significantly.
The core driving force for the 2020-2023 cycle mainly comes from the concentrated release of consumer electronics terminal demand. From 2020 to 2021, new work and learning models such as remote work and online education have become widely popular, significantly driving the demand for devices such as laptops and smartphones, and becoming an important engine for the expansion of storage chip demand.
The new cycle starting in 2024 will benefit from the demand growth brought by AI infrastructure. The first two cycles essentially relied more on consumer power, while the demand for storage products in this round comes more from the computing infrastructure of large technology companies in the AI era, and the sustainability may be stronger. So, how long can this AI triggered super cycle of storage price increases continue? Top players in the industry express optimism. SK Hynix CEO Guo Luzheng expressed optimism about the memory semiconductor market next year. Chen Libai, Chairman of ADATA, the world's second largest storage module manufacturer, also directly stated that the fourth quarter of 2025 is the starting point, and next year's industrial prosperity is expected. Several well-known storage analysts also predict that the DRAM and NAND Flash markets are currently experiencing shortages, and it is expected that industry prices will further rise in the fourth quarter of this year and 2026.