Prices for DRAM and NAND flash are set to fall, sharply, in the second half of 2022 according to analyst firm Gartner.
In a memo published last week and obtained by The Register, the firm predicts “oversupply” of memory chips will develop as demand eases and supply increases. A “significant price reduction” is therefore likely, the firm states, without offering a more precise estimate of how far prices will fall.
The memo appears to be is directed at hardware manufacturers and advises them to start designing products that use more memory or keep memory and price the same but add other components – better CPUs, batteries or screens are suggested – to keep overall bill of material costs the same while also making devices more attractive.
Alternatively, manufacturers can do nothing and enjoy the falling prices’ impact on their bottom lines.
“Let the BOM of the equipment decline while maintaining the existing price to customers and thus increase margins,” the memo suggests.
The impact of either strategy on kit Reg readers buy could be significant, as Gartner estimates that memory accounts for 12 per cent of the bill of materials in a premium smartphone and 35 per cent of the cost of a “basic” handset.
The memo states that memory contributes even more – 40 percent – to the cost of a two-socket server.
The analyst firm doesn’t opine on what that means for buyers, but The Register imagines these price falls will create some interesting opportunities to plan for upgrades or perhaps just ensure that suppliers pass on lower costs for kit you need late next year.
Rival analyst firm IDC has also predicted a turnaround in the chip market, forecasting the end of shortages and “potential overcapacity” in 2023.
Sadly, Gartner describes market conditions in 2022 as “unusual” – suggesting that cheap memory prices are not going to be a feature of the “new normal”. ®