Kris Powers, CFA

[Commentary on DRAMeXchange December Server DRAM Fixed Prices & Industry Trends] - December Pricing & Additional Orders: Negotiations for December Server DRAM fixed prices are proceeding at elevated levels, with additional orders for December delivery becoming a key topic. Major customers include US CSPs, Chinese CSPs, and OEMs. As supplier inventories are depleted, additional orders can only be fulfilled by rescheduling delivery timelines with existing customers. Consequently, actual transaction prices in December surged, rising 88–93% compared to the 3Q25 average fixed price. Furthermore, the 4Q25 fixed price is expanding to a level 53–58% higher QoQ. - 1Q26 Outlook & Supplier Stance: From December, the negotiation focus is gradually shifting to 1Q26 contracts. Given the current tight supply-demand conditions, suppliers are expected to propose initial quotes reflecting a 60–70% increase, exceeding the levels seen in December's add-on orders. Suppliers maintain a bullish outlook for continued quarterly price hikes throughout 2026. Anticipating further increases in future quarters, they are currently reluctant to sign multi-year lock-in contracts with CSPs. - 2026 Price Forecast: Considering the above, the growth rate for Server DRAM fixed prices in 2026 is projected as follows: 1Q (+60–65%) / 2Q (+10–15%) / 3Q (+3–8%) / 4Q (+0–5%). This represents an upward revision from last month's estimates, and further upward adjustments cannot be ruled out. - CSP Financials & Demand: CSPs assess that cash flows generated from existing businesses can sufficiently cover CapEx for large-scale infrastructure build-outs, with a focus on realizing monetization from inference AI. Therefore, they are not significantly pushing back against DRAM price hikes, accepting them to secure stable volumes. Analysis suggests that considering their margin structures, customers still have room to absorb these price increases. - Market Monitoring: Market participants are closely watching these purchasing strategies to determine when the peak of the price (P) cycle will occur. OEMs are expected to maintain margin headroom until at least 1H26, while CSPs are projected to be capable of absorbing potential supply gluts in the market. - HBM3E Impact & Supply Allocation: Entering December, GPU/ASIC manufacturers retracted previous expectations for a decline in HBM3E purchase prices in 2026, as suppliers successfully induced price hikes against the backdrop of shortages. Consequently, suppliers are reducing legacy commodity DRAM supply to focus on HBM3E. Amid this trend, adjustments to supply and procurement volumes for CSPs and OEMs continue within 2026 LTAs (Long-Term Agreements). Some OEMs and Chinese CSPs with relatively lower transaction stability have reportedly received notices of supply cuts. Overall, while Server DRAM supply volumes are being revised upward, PC DRAM remains an application area where suppliers are concentrating on production cuts. - Customer Prioritization: Supplier allocation decisions are based on the customer's actual demand levels, past transaction history, and partnership evaluation. With US CSPs showing rising transaction prices for Server DRAM and HBM while actively securing 1H26 deliveries, the possibility cannot be excluded that suppliers may cut Server DRAM supply for lower-priority customers. This increases the likelihood of intensifying tight supply conditions for OEMs and Chinese CSPs. - AI-Driven Demand Growth: As inference AI applications like Gemini and Copilot drive demand for commodity servers, CSPs (led by MSFT and Google) are aggressively increasing server assembly orders to ODMs. Accordingly, the 2026 server shipment growth forecast has been revised upward from 9% to 13% YoY. Additionally, the expanded adoption of multi-core CPUs is increasing procurement of high-capacity RDIMMs, pushing Server DRAM content per box up 20% YoY. Total Server DRAM bit demand growth is expected to reach 39%, significantly exceeding the previous forecast of 23%. - Contract Terms (NCNR): Suppliers are negotiating LTA contracts that include NCNR (Non-Cancellable, Non-Returnable) clauses with major customers, aiming to secure long-term CapEx visibility through 2028 based on these agreements. However, despite these contracts, securing sufficient supply in a timely manner for 2026 is expected to remain challenging. (Source: DRAMeXchange)