Investigation into the price inversion of DDR4: How did HBM chips trigger a price hike for the “outdated” memory?

Under the surface of the market, how exactly has the capacity demand for HBM triggered this "butterfly effect" that has swept across the entire traditional storage supply chain?

A semiconductor product, DDR4 memory (the fourth-generation double data rate memory), which should have gradually faded out of the mainstream market according to the law of technological iteration, has recently shown an abnormal price trend in the spot market for storage chips.

On July 11, when a reporter from Economic Observer visited the Huaqiangbei Electronics Market in Shenzhen as a purchaser, they noticed a contradictory phenomenon: on the one hand, there was still demand for inquiring about the price of DDR4 memory modules for specific orders in industrial control, security, etc.; on the other hand, most counters still recommended products related to the new-generation DDR5 (the fifth-generation double data rate memory, a replacement product for DDR4) to the reporter. However, merchants were generally cautious about quoting prices for DDR4 and frequently declined the demand on the grounds of "no spot" and "prices changing daily."

According to data released by market research firm Flash Memory Market (CFM) on July 8, the price of DDR4 16Gb eTT particles has risen to $4.50, even exceeding the quote of $4.00 for DDR5 16Gb eTT particles on the same day. So-called memory particles refer to independent chips cut and packaged from a whole silicon wafer, which are the core semi-finished products before being assembled into memory modules; eTT particles specifically refer to those that have not undergone complete and strict testing by the original manufacturer and are mainly circulated in the spot market of the distribution channel.

The price of the previous-generation product has exceeded that of the new-generation product, resulting in a rare "price inversion" phenomenon in the storage market.

Regarding the deep-seated reasons for this abnormal phenomenon, Xu Jiayuan, an analyst at TrendForce, said in an interview with a reporter from Economic Observer that currently, Samsung and SK hynix are in the process of process conversion, and "capacity is prioritized to ensure the production of Server DRAM (server dynamic random access memory) and HBM (high-bandwidth memory), resulting in limited bit output of PC DRAM and mobile DRAM."

He believes that the contraction of the supply side due to HBM while the demand side has not declined synchronously. This "mismatch between supply and demand" is the direct cause of this round of price increase for DDR4.

Multiple interviewees told the reporter that the fundamental reason why the price of DDR4, as a previous-generation product, has not decreased but instead increased, even exceeding that of the new-generation product, is that upstream original manufacturers have actively reduced the supply of DDR4 to focus on high-profit HBM, resulting in a shortage on the supply side. However, in the downstream market, some specific industries (such as industrial control and security) still have an irreplaceable "rigid demand" for DDR4 due to their product cycles and certification costs.

In addition, Yang Yiting, an analyst at Flash Memory Market, also told the reporter that the reason for the tight supply of DDR4 products is that "recently, original manufacturers have successively issued EOL (End-of-Life) notices for DDR4." However, there is still a certain long-tail demand for DDR4 products from terminals such as servers and PCs, and the downstream is urgently building up DDR4 inventories.

When the continuous "rigid demand" meets the sharply contracted "supply," it ultimately gives rise to this counterintuitive "price inversion."

According to public information, since the second quarter of this year, Samsung and SK hynix have successively issued EOL (End-of-Life) notices for some DDR4 products to their customers, and executives of Micron Technology also confirmed the production suspension plan for DDR4 used in PCs and servers at a public event in June. These three companies account for more than 95% of the global DRAM market supply share.

The business logic behind the original manufacturers' actions is very clear: they prioritize investing precious wafer production capacity and R & D resources into high-value-added products represented by HBM for AI servers. Financial report information shows that SK hynix achieved an operating profit margin of up to 42% in the first quarter of 2025 and expects HBM sales to account for more than 50% of its total memory sales in 2025.

This top-down capacity switch quickly transmitted the pressure to the middle and lower reaches of the industrial chain.

"For example, if you ask me about the price of (DDR4) at $4 today, it might be $4.5 in a few days. The more you ask, the higher the price," a market leader of a storage module manufacturer in Shenzhen told the reporter on July 10.

In addition, Flash Memory Market also pointed out in its latest report that enterprise customers such as servers have developed a strong "resistance psychology" to the high-priced DDR4. Except for sporadic urgent orders, customers generally refuse to "buy at a high price," and the consumer market has been forced to accelerate the migration to the DDR5 platform.

So, under the surface of the market, how exactly has the capacity demand for HBM triggered this "butterfly effect" that has swept across the entire traditional storage supply chain?

"Ultimatum"

DDR, full name "Double Data Rate Synchronous Dynamic Random Access Memory," is one of the key core components that determine the operating speed and multi-tasking processing ability of electronic devices such as computers and servers. As its fourth-generation product, since its debut in 2014, DDR4 has played an absolutely dominant role in the market for up to ten years and is the cornerstone supporting the computing system of the previous generation of PCs and servers.

In terms of product classification, DRAM (Dynamic Random Access Memory) is a large technical category, and what the market usually refers to as DDR4 and DDR5 are the most widely used mainstream iterative products of DRAM technology in the fields of PCs and servers; HBM (High-Bandwidth Memory) is a special high-priced product derived from DRAM technology to meet high-performance computing scenarios such as AI servers.

According to the law of technological evolution in the semiconductor industry, the emergence of the new-generation product DDR5 should have replaced DDR4 as usual. Compared with DDR4, DDR5 has significant improvements in transmission speed, bandwidth, single-chip capacity, and power consumption control, and can better meet the demand for massive data throughput of the new-generation CPU and AI applications.

Therefore, since 2023, the entire storage market has entered the generational transition cycle from DDR4 to DDR5. However, this generational transition process, which should have been smooth, gradually became disordered after the second quarter of 2025.

"The price increase of DRAM is very sharp. In particular, the price increase of some models of DDR3 and DDR4 is close to 100%," the market leader of the aforementioned storage manufacturer in Shenzhen told the reporter frankly. The research report released by Flash Memory Market on July 8 also stated that recently, some suppliers have "violently increased" the official price of DDR4 eTT particles, with an increase of nearly 50%.

The madness of the market was ultimately reflected in the key product of server memory. Flash Memory Market pointed out that the spot price of DDR4 RDIMM (Registered Dual In-line Memory Module, a common specification for server memory) memory modules for servers has doubled compared with the low point in the first quarter of this year after continuous and rapid price increases. A stall owner in Huaqiangbei told the reporter during a visit in early July that currently, there is a lot of "speculative behavior" in the market and the prices are inflated, which further exacerbates the price chaos.

To understand the transmission mechanism of this price storm, we first need to clarify the industrial chain structure of storage chips.

This industrial chain can be roughly divided into three links: the upstream is the wafer original manufacturers (IDM) with the highest technological and capital barriers, such as the three giants Samsung, SK hynix, and Micron. They control the entire process from design, manufacturing to packaging and testing and directly produce the most core raw material - memory particles; the middle stream consists of numerous storage module manufacturers and distributors. They purchase memory particles from the upstream and then combine self-developed or third-party main control chips and firmware algorithms to design and assemble them into final products that consumers and enterprises can directly use. For example, companies such as Jiangbo Long (301308.SZ), Baiwei Storage (688525.SH), Demingli (001309.SZ), and Langke Technology (300042.SZ) in the domestic A-share market are all representative enterprises in this link; the downstream is connected to the vast terminal application market, including brand manufacturers of PCs, servers, smartphones, etc., as well as ordinary consumers who purchase products through retail channels.

Therefore, for module manufacturers and distributors in the middle and lower reaches of the industrial chain, every move of upstream original manufacturers affects their nerves.

Yang Yiting, an analyst at Flash Memory Market, told a reporter from Economic Observer: "Recently, original manufacturers have successively issued EOL (End-of-Life) notices for DDR4. Considering that there is still a certain long-tail demand for DDR4 products from terminals such as servers and PCs, the downstream is urgently building up DDR4 inventories, resulting in a tight supply situation for DDR4 products recently."

During the interview, the reporter also learned that the so-called EOL notice is an official document with the meaning of an "ultimatum" in the semiconductor industry. It means that upstream original manufacturers will officially stop accepting orders and producing this model of product and give a deadline for "Last Time Buy."

For downstream customers, this is tantamount to a choice: either accurately estimate the product demand in the next few years and invest a large amount of funds in one-time strategic stockpiling; or immediately invest the same high R & D cost and time cost to redesign the hardware of existing products to adapt to new-generation components.

Either choice is full of risks and uncertainties. The market leader of the aforementioned storage manufacturer in Shenzhen told the reporter: "Some original manufacturers have significantly affected the market price trend by controlling the supply rhythm and price of wafer raw materials."

Xu Jiayuan also gave the same judgment, that is, the EOL schedule planning of original manufacturers has promoted module manufacturers to actively stockpile DDR4 particles.

As one of the core players in the industry, Jiangbo Long also pointed out in a recent investor communication memo that "recently, affected by the decision of storage wafer original manufacturers to strategically withdraw from part of the DDR4 business, the price of some DDR4 has increased significantly in the short term."

Thus, the panic stockpiling wave, combined with the hoarding behavior of some speculators, quickly drained the market liquidity and ultimately led to the deadlock of "high prices but no transactions."

During a visit to Huaqiangbei in early July, the reporter learned that since June, after the continuous increase in the price of DDR4 in the distribution channel, the market has begun to cool down. Due to the excessive price increase of some individual products in the early stage, both buyers and sellers have fallen into a continuous stalemate, resulting in a weak trading situation.

But in fact, before the price reversal in the second quarter, the entire storage industry had just experienced a cruel downward cycle.

According to the description in Baiwei Storage's first-quarter report, the price of the storage market reached a "phased low point" in the first quarter of 2025. This market trough was also directly reflected in the performance of manufacturers in the middle of the industrial chain. According to public financial reports, Baiwei Storage had a net loss of 197 million yuan in that quarter, and Jiangbo Long, another leading storage module manufacturer, also had a net loss of 152 million yuan in the same period.

The market leader of the aforementioned storage manufacturer told the reporter that although DDR5 is the future trend, in niche markets with low performance requirements but extremely high requirements for stability and compatibility, such as industrial control, security monitoring, and TV set-top boxes, DDR4 is still a more cost-effective choice. In addition, the reporter also learned that some old Intel CPU platforms still in service only support DDR4, which also constitutes the underlying support for its demand. It is this part of rigid demand that provides a basis for market inquiries.

This "rigidity" of demand is rooted in the product characteristics of the niche market itself: different from consumer electronics with rapid iteration, the life cycle of an industrial control system, a vehicle entertainment module, or a security camera motherboard often lasts for 5 to 10 years. During this period, any minor change in core components may mean a complete redesign of the hardware solution, a re - adaptation of the software, and a whole set of long and expensive industry certification processes. Therefore, for manufacturers in these fields, maintaining the stability of the supply chain during the product life cycle is far more important than chasing the latest technical parameters. The comprehensive cost of stockpiling old - style DDR4 at a high price once is often still lower than the implicit cost of changing platforms and re - certifying.

Flash Memory Market also pointed out that the high price of DDR4 RDIMM has made server terminal customers "increasingly resistant." Except for the unavoidable "sporadic urgent orders," large customers generally do not want to "buy at a high price" at this time.

In the consumer market, which is more sensitive to prices, most terminal customers have chosen to "let go" and switch to other options. In this regard, Flash Memory Market analyzed that the increasingly narrowing price difference and even "inversion" between DDR4 and DDR5 are "forcing" channel customers in the PC market to "upgrade from DDR4 to DDR5." A merchant in Huaqiangbei also told the reporter that in the case of a shortage of DDR4 spot, they will actively recommend customers to switch to DDR5 products with more stable supply and similar prices.

So far, a complex market picture has emerged: the upstream has violently increased prices, the middle stream has panicked to grab goods, and the downstream has been divided between rigid demand, resistance, and forced conversion. All these seemingly chaotic market behaviors ultimately point to the same source - HBM.

"Siphon Effect"

On the counters in Huaqiangbei, Shenzhen, the price quotes for DDR4 are updated daily. However, thousands of miles away in South Korea and the United States, at the performance briefings of the world's three major storage original manufacturers, this once - profitable pillar product is hardly mentioned. Everyone's attention is focused on a new name.

For example, Sanjay Mehrotra, the president and CEO of Micron Technology, attributed the company's record - breaking revenue performance in the third quarter of fiscal year 2025 directly to meeting the "growing memory demand driven by artificial intelligence." The core of the "memory demand" he mentioned is HBM. As an indispensable "right - hand man" for high - computing - power GPU chips in AI servers, HBM has become one of the most certain incremental markets in the current AI wave.

In fact, the strategic inclination of storage giants towards HBM has been reflected in real financial data and business goals. Micron's financial report shows that it achieved record - breaking revenue in the third quarter of fiscal year 2025, among which "HBM revenue increased by nearly 50% quarter - on - quarter." SK hynix maintained its outlook of "a two - fold year - on - year increase in HBM demand in 2025" in its first - quarter 2025 performance briefing and delivered "the world's first batch of HBM4 12Hi samples" to customers in March this year to demonstrate its technological leadership. Samsung Electronics also listed "expanding the sales of enhanced HBM3E 12H products" as a core goal in its first - quarter 2025 performance briefing.

Xu Jiayuan told the reporter that it is this extremely high market growth expectation that has led original manufacturers to make the decision of "prioritizing capacity to ensure the production of Server DRAM and HBM." Of course, the focus of resources on HBM has also directly led to the "planned" compression of the production capacity of traditional product lines. This is a global strategy that runs through all product lines of original manufacturers.

According to a storage market outlook report released by Flash Memory Market on July 2, in terms of DRAM, the demand proportion of LPDDR4X in mobile phones is still relatively large. After the production line switch of original manufacturers, it is expected that there will be an overall supply gap of about 15% - 20% for mobile phone LPDDR4X. In particular, the supply of low - capacity LPDDR4X of 6GB and below is very limited, which will drive the contract price of LPDDR4X in the third quarter to increase by more than 20% quarter - on - quarter and approach the ASP (Average Selling Price) of LPDDR5X.

Currently, whether it is DDR4 for PCs or LPDDR4X for mobile phones, these previous - generation products with relatively thin profit margins are all "making way" for HBM and DDR5. However, the wafer production capacity of storage original manufacturers cannot be infinitely expanded. The investment in an advanced wafer factory often costs hundreds of millions of dollars, and its total production capacity is relatively fixed within a certain period. Under the limited total production capacity, production decision - making becomes a mathematical problem about cost.

More importantly, compared with traditional DRAM, the manufacturing process of HBM is more complex. It not only requires more wafer area but also additional through - silicon vias (TSV) and advanced packaging processes. This means that the comprehensive production capacity and resources consumed in producing one HBM wafer are far higher than those of a DDR4 wafer of the same size.

Facing this mathematical problem, when HBM can bring several times the profit, DDR4, with mature technology and severely compressed profit margins, becomes the first option to be "optimized" from the production capacity planning. On the other hand