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DDR5 memory prices could rise 20% due to increasing demand for AI chips

Facepalm: DDR5 prices have fallen drastically since their debut a few years ago, with PC builders and DIY enthusiasts currently enjoying dirt-cheap prices on the latest memory modules. However, the good days of ultra-cheap DDR5 may be coming to an end, with a new report suggesting that DRAM prices may increase significantly over the next year.

According to analysts from market research firm TrendForce, high-bandwidth memory (HBM) prices are expected to rise 5-10 percent in 2025 due to exceptionally high demand from the AI sector, leading to a price increase for other types of DRAM. Unfortunately for PC builders, this will also affect the DDR5 market, as it will reportedly see a 15-20 percent price increase, with memory manufacturers expected to shift priorities to the more lucrative HBM market.

HBM is about five times more expensive than DDR5, and the exploding demand for this type of memory is expected to “dramatically raise” its share in the DRAM industry, both in terms of capacity and market value. Fueled by the AI boom, demand for HBM has reached fever pitch, with both Micron and SK Hynix reporting that their supply of high-bandwidth memory is completely booked for the entirety of 2024 and a significant portion of 2025.

According to TrendForce Senior Research Vice President Avril Wu, HBM’s share of total DRAM capacity is estimated to rise from 2 percent in 2023 to 5 percent in 2024 and surpass 10 percent by 2025, while its market value could exceed 30 percent of the total DRAM market by the end of next year.

While HBM offers significant performance and capacity advantages over other types of DRAM, it is also relatively more difficult to manufacture, meaning the additional HBM production is likely to reduce resources for the manufacture of other types of memory, including DDR5, thereby reducing their availability in the market and pushing their prices up.

The report predicts that the annual growth rate of HBM demand will be nearly 200 percent this year, and it is tipped to further double in 2025. There will also reportedly be a significant shift towards HBM3e next year, with the report predicting an increase in 12Hi stack products. The change is expected to increase the HBM capacity per chip, which should come in handy for AI solution providers.

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