DRAM Module Prices Plunge, Memory Stocks Tumble, Has the Memory Super Cycle Peaked?

Recent weeks have witnessed a sudden reversal in the months-long upward trend of memory prices, sparking market concerns that the memory cycle may have reached its peak.

According to market tracking data, widespread price reductions for DDR5 memory modules have been observed at several major US retailers, with the highest single-kit discount reaching $100. For example, the price of Corsair's VENGEANCE series 32GB kit with speeds up to 6400MHz is now approximately $379.99, a significant drop from a recent peak of around $490, representing a decrease of over $110 per kit.

The domestic market in China has also been impacted. A wholesaler indicated that prices for mainstream 16GB memory modules have fallen by over one hundred yuan in a single day, prompting large-scale sellers who had previously stockpiled inventory to engage in frantic selling. A seasoned wholesaler operating in the Bainao Hui market stated that prices began to collapse starting last Saturday. He presented an extreme price chart for a mainstream 16GB 3200MHz module: priced at just over 130 yuan in May last year, it skyrocketed to a peak of 980 yuan by December, but after several months of volatility at high levels, the spot price has now retreated to around 700 yuan.

The wholesaler expressed frustration, noting that the sharp price increases had exhausted consumer demand. He stated that sales have plummeted by more than 60% compared to the period before November last year, as only those with immediate needs are purchasing.

Simultaneously, released a research paper detailing a new compression algorithm named "TurboQuant." The study claims this technology can reduce the memory footprint of Key-Value Cache (KV Cache) during large language model inference by at least 60%. Investors quickly interpreted this development as a sign that the AI hardware shortage could be fundamentally alleviated, leading to a substantial reduction in memory demand.

The chill in the spot market rapidly spread to capital markets. Shares of Micron Technology have retreated more than 24% from recent highs, while Western Digital has fallen nearly 21% from its peak of $777.60. Additionally, the US memory chip sector saw nearly $100 billion in market capitalization evaporate last week.

Faced with plunging prices and stock values, market participants are deeply divided on the outlook for the memory industry. Some investors believe the traditional memory "hog cycle" has peaked. However, HSBC's institutional analysis suggests the market is overly concerned, positing that the industry is currently in the middle of an AI-driven memory super cycle, with robust demand for high-end products like HBM, and that memory shortages could persist for one to two years.