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NAND vs DRAM: A Tale of Two Markets

NAND vs DRAM: A Tale of Two Markets

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Editor’s Note: This article was originally published in July 2018. It has since been updated for accuracy.

DRAM Sees Upcoming Price Consolidation While NAND-flash Drops

Two components seeing the worst effects of the chip glut and demand slump right are also one of the most ubiquitous: memory chips. Whether dynamic or solid-state, applications need increasingly more data storage and processing power, but without demand, they have nowhere to go. Manufacturers are doing their best to decrease capacity as excess electronic component inventory rises. Market prices are low despite inflation across the industry and lead times taking cliff dives. When is recovery coming to these two critical memory markets?

A History Lesson on DRAM and NAND Supercycles

First, some recent history. We’re just now coming out of a “super cycle” during which demand outstripped capacity and drove up prices for DRAM and NAND-flash memory chips. The Covid-19 pandemic struck the industry directly after several years of low prices and only a few memory manufacturers with the resources to invest in the capital expenditures needed to keep up with the demand for smaller, denser chips. The major players in the NAND-flash market were whittled down to six and DRAM a mere three, with Samsung the biggest producer of both.

When the Covid-19 pandemic began, demand initially dropped across the semiconductor market. As lockdowns took effect, spending cuts occurred based on the presupposed notion that consumer orders for electronics and other white goods would drop immensely. Instead, the work-from-home (WFH) model rose when companies realized lockdowns were not a matter of weeks, but months. To avoid closing for good, businesses transitioned digitally almost overnight. Computers, Wi-Fi routers, keyboards, headsets, video cameras, and more spiked in demand, and so too did the need for memory chips. A shortage was inevitable.  

The omnipresence of smart devices and the dramatic expansion of data storage and processing centers, used for everything from transactional data to health records, fed into the need for memory chips. There’s simply no substitute if you need to work with digital data - and these days, that’s nearly everyone.

In the last two quarters of 2022, the demand initially feeding the ongoing consumer electronics shortage suddenly dropped off. Inflation, recession concerns, an energy crisis in Europe raising transport costs, and a war in Ukraine led to an unfavorable macroeconomy that turned consumers away. With demand drying up, original equipment manufacturers (OEMs) and contract manufacturers (CMs) tried to reduce building excess electronic component inventory as fast as possible. The quickest way to accomplish that was to cancel orders, leaving original component manufacturers (OCMs) grappling with the growing stock.

With nearly a year of excess inventory and low demand, DRAM and NAND are continuing their downward price and lead time spiral. Memory suppliers Samsung Electronics and SK Hynix are optimistic about the memory market's recovery at the beginning of Q3 - Q4.  

How will this affect…


The biggest question on everyone’s mind is how these market conditions will affect prices. During an excess market, prices tend to drop significantly. After all, without demand, costs drop. We are in a strange middle ground for price range after several years of expansive growth and inflation, contributing to a steady and steep climb in costs for DRAM and NAND-flash products.  

Now, prices are rapidly trending down. When excess inventory rose in late 2022, memory suppliers were quick to cut costs as OEMs and CMs canceled any order they could. This continued into the new year with prices dropping over the first half of 2023 as excess inventory rose.  

The industry has been waiting for a price bottom to consolidate. For DRAM products, late Q2 and early Q3 have marked the beginning of its price consolidation. Experts believe prices now have nowhere to go but up, closer to recovery as OEMs and CMs begin to reorder stock.

NAND-flash is still dropping and won’t reach a price bottom for another quarter. Most industry leaders agree that NAND-flash will recover in Q4 2023 or Q1 2024, following normal supercycles within the memory market.  


The availability of DRAM and NAND-flash for the next few quarters will remain in excess, with an expectation of increased future production as new factories finish construction. Global connections will continue to aid in excess electronic component inventory mitigation, and the growing artificial intelligence (AI) boom will begin eating away the surplus parts.

If AI continues to explode in demand beyond what’s already forecast, availability could quickly plummet, just as it did in the 2020-2022 global semiconductor shortage and 2016. Over the next year, we'll see how well manufacturers have predicted the market.

Caveat: AI Demand Could Trigger Another Cycle

Even though prices continue to drop across DRAM and NAND-flash markets, these two components could see an uptick in demand quickly enough that memory suppliers will be unable to meet. This could result in a significant shortage, increasing lead times and prices and kicking off the shortage cycle once more.  

For some time, Samsung Electronics and SK Hynix have said that Q3-Q4 would mark the beginning of recovery for the memory market. This theory is starting to come to fruition as a narrower second-quarter profit loss for SK Hynix marks the start of the memory supplier’s upward climb. Excess electronic component inventory is expected to decrease after this peak season.  

Memory recovery and excess inventory diminishing is due to the growing demand for artificial intelligence software and applications. The ever-increasing popularity of ChatGPT is contributing to the rising demand for generative AI applications amid low consumer electronic demand.

The DRAM market has already consolidated at a price bottom over Q2 and into Q3. Following the cyclicity of the memory market, most suppliers and industry experts see DRAM recovering before NAND. This is holding true as NAND-flash is still dropping while DRAM consolidates.

There are likely a few more quarters of low prices and high availability. However, some industry experts believe 2024 could be a pivotal year for memory, where it bullwhips from excess to scarcity. The contributing factor to such a change would be the AI boom.

The sudden drop in consumer demand in late 2022 forced memory suppliers to cut production strategically, including Samsung Electronics, a company known for reducing spending before cutting production. Samsung made specific cuts to its DDR4 lines in Q1 of 2023, following significant production cuts by competitors, SK Hynix and Micron Technology. With production capacity low, it will take some time for memory suppliers to once again increase production to meet demand. At AI’s current pace, demand might quickly shoot past production capacity, initiating another harsh switch between the two extreme market conditions, shortage and glut.

This will depend on how many new factories will come online and who else enters the market. Samsung Electronics, Micron Technology, and SK Hynix have worked on growing their global footprint through new fabs or expanding their existing facilities. These new facilities could help improve capacity should the market shift again. However, with the lack of skilled technicians in other countries like the U.S. and EU, this could complicate the process. It will take another few months to see just what direction the market will take.  

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