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Global Commodity Intelligence

Q2 2025 | APRIL - JUNE

Memory Pricing Increases to Continue Throughout 2021

Brad Crouch, Global Commodity Manager

The memory commodity, driven primarily by DRAM and NAND Flash, is one of the largest and most volatile product families within the larger semiconductor segment. With total revenues well over $100B annually, this commodity represents approximately 30% of worldwide semiconductor revenue. It has a long history of “boom and bust” cycles with the last boom cycle in 2018 and revenues of over $160B. However, 2019 revenues fell to a little over $100B or a ~35% YoY drop. The commodity continues to drive process technology, the average process node for DRAM is around 16nm.

The cyclic nature of the memory commodity also drives considerable swings in CapEx investments to “match overall projected supply with forecast demand.” Large down years like we experienced in 2019 drastically reduces CapEx. As demand increases, the lag helps to drive market prices up considerably experienced in the current market with 2021 forecasted to be another boom year for memory revenue growth.

What You Should Know

We are in the early stages of a “boom cycle” for the memory commodity which is projected to last well into 2022.
Load firm orders out as far as possible to provide suppliers as much visibility as we can on demand. Do not make unnecessary schedule changes. Allocated product will be released to other customers.
Communicate price increases to customers.
Look to alternative sourcing where possible.
Communicate demand with suppliers to ensure short-term and long-term requirements are understood.

This current cycle of memory growth for DRAM will be driven by the automotive segment, datacenter requirements and an increase in PC sales (stay-at-home business demand) which is projected to continue to grow in 2021 from a high of over 400M units in 2020. For NAND Flash, bit rate growth continues at a torrid pace of greater than 30% YoY with drivers such as Solid-State Drive (SSD’s) and insatiable demand for smartphones (over 1.8B units annually), including new 5G models.

What Will 2021 Look Like?

With exceptional strong momentum coming out of 2020 and the reduced investments made in 2019, we can assume 2020 will continue to be a “seller’s” market as we move through 2021. DRAM pricing is forecasted to increase more than 35% from Q4’20 to Q4’21. In addition, the overall electrification of the automotive industry for both EV and advancement of autonomous driving capabilities will further compound the current supply and demand imbalance. Automotive DRAM CAGR (’19 – ‘25) is forecasted to be 42%, followed by datacenter at 28%, mobile, consumer and PC segments. It’s been reported by Micron that over 20% of their revenues are now coming from the automotive segment. As the overall semiconductor market continues to consolidate, the DRAM suppliers are now heavily concentrated in three major suppliers providing the market with over 90% market share.

As with DRAM, the NAND Flash market has been on a steady recovery since its peak in 2018. NAND Flash will also be driven by “hyper growth” in the automotive segment with 73% CAGR (’19 – ‘25) followed by enterprise and SSD at 40%, mobile, client SSD and consumer segments. Bit rate demand in 2021 is projected to increase 35% over 2020.

The supply base for NAND Flash has also consolidated, however, not to the same extent as DRAM. For this product segment, the top seven suppliers represent >95% of the market.

Impact for Jabil and Its Customers

We are in the early stages of the next memory upcycle which will drive price increases throughout 2021 for both product families. DRAM products will be under greater pressure with fewer suppliers so expect routine price increases. With high demand coming from the automotive segment (top growth segment for both DRAM and Flash), we need to work closely with our customers to ensure continuity of supply and appropriate management of the price increases. This includes maximizing demand visibility to our suppliers and understanding the consequences from schedule changes. And the potential loss of committed supply. Shortages in raw materials and subcon constraints will force suppliers into allocation mode. Expect the tight market to continue throughout the remainder of 2021.

If you have any questions or need additional information, please do not hesitate to contact me directly (brad_crouch@jabil.com).