BofA Analyst: DRAM Spot Prices Could Fall 50% With Limited Impact on Overall ASP

A BofA analyst suggests that DRAM spot prices are overvalued due to low trading volume and could fall by 50%.

This price drop is expected to have a minimal impact on memory companies' overall revenue, as most sales are based on stable, long-term contract prices.

The current market structure, where AI-focused HBM production squeezes general-purpose DRAM supply, means spot prices are not a reliable indicator of the industry's health.

삼성전자SK하이닉스MU

A recent Bank of America analysis suggests that even a 50% drop in DRAM spot prices might not be a major issue for memory chip makers.

This seemingly bold claim is rooted in the unique structure of today's memory market. The core idea is that the spot price, the price for immediate chip sales, is currently a poor indicator of the industry's overall health.

So, what's happening? First, the AI boom has caused chipmakers to prioritize producing high-demand, high-value chips like HBM (High Bandwidth Memory). This has squeezed the supply of general-purpose DRAM used in PCs and smartphones, causing their spot prices to surge. However, trading volume in the spot market is extremely low—what analysts call a "high and thin" market. Many potential buyers are watching, not participating.

Second, the vast majority of memory chips are not sold on the spot market. Instead, they are sold through long-term contract prices negotiated months in advance with major customers like Apple or Dell. Companies like Micron have confirmed they are signing multi-year Strategic Component Agreements (SCAs), which provide stability and predictable revenue.

Because the spot market represents such a small slice of total sales (perhaps only 2-10%), even a large price drop has a limited mathematical impact on a company's overall Average Selling Price (ASP). The BofA analysis simply highlights this reality: don't mistake the volatile, thinly-traded spot market for the entire industry's performance. The real story is in the stable, high-volume contract market.

A similar logic applies to NAND flash memory. While prices have risen sharply recently, major investments in production and packaging capacity by companies like SK Hynix are expected to increase supply later in the year. This could lead to prices stabilizing or gently declining by year-end.

Spot Price: The market price for a product (like a memory chip) that is available for immediate delivery. It is often more volatile than contract prices.
Contract Price: A price for a product that is negotiated in advance between a supplier and a buyer for future delivery. It is the primary pricing mechanism for major electronics manufacturers.
ASP (Average Selling Price): A financial metric that represents the average price at which a company sells its products or services. It is calculated by dividing total revenue by the total number of units sold.