Memory manufacturers change focus

The cost of DDR4 memory has surged dramatically due to major manufacturers phasing out production to prioritize DDR5 and HBM (High Bandwidth Memory) for the AI market. This trend results in significant price increases, supply shortages, and long-term planning challenges for industrial customers reliant on DDR4.

 Memory Cost Increase

The price of DDR4 memory has experienced extreme volatility and sharp increases throughout 2025, a trend expected to persist into 2026.

• Significant Price Hikes: DDR4 contract prices increased by 40-45% in Q3 2025, with an additional 18-23% increase in Q4 2025 alone. Some spot market prices reportedly doubled in just a few months.
• Price Inversion: In a rare market event, the cost per gigabyte of DDR4 has become more expensive than DDR5 due to the severe supply constraints.
• Forecast: Prices are not expected to stabilize or drop significantly until new production capacity comes online, potentially in late 2026 or 2027.

General Information (Market Dynamics)

The price surge is driven by fundamental shifts in the semiconductor industry:

• AI Demand Dominates: The explosive growth of AI infrastructure and data centers consumes massive volumes of high-margin DDR5 and HBM memory, leading manufacturers to reallocate wafer production capacity away from legacy DDR4.
• Production Shifts: Leading manufacturers (Samsung, SK Hynix, Micron) are operating their remaining DDR4 lines at reduced capacity (as low as 20% of prior levels) to optimize for profitability in next-generation memory.
• Supply Chain Response: Distributors and retailers have faced immense pressure, with some temporarily halting price quotes or shifting to spot pricing to manage daily cost fluctuations.

The Situation Regarding DDR4 Manufacturing

Major manufacturers are systematically exiting the DDR4 market, with definitive timelines for the end of orders and final shipments which open up for market transition. Chinese and Taiwanese manufacturers are expected to partially fill the market deficit, but their capacity may not be sufficient to fully cover the need.

How This Affects Industrial Customers

Industrial customers, who rely on DDR4 for long-lifecycle products like factory automation, medical equipment, and networking infrastructure, face unique and critical challenges:

• Obsolescence Risk for Legacy Platforms: Industrial systems often have long development cycles and require specific certifications (e.g., FDA approval for medical devices), making a swift transition to DDR5 technologically and logistically complex or impossible in the short term.
• Supply Chain Disruption: Tight supply results in extended lead times (up to 26 weeks or more) and allocation limits, threatening production continuity and maintenance of existing systems.
• Increased Operating Costs: The sharp price increases directly impact Bill of Materials (BOM) costs and potentially leading to higher end-product prices.
• Procurement Strategy Shift: A “Just In Case” inventory strategy and robust forecasting are now essential to secure allocation and mitigate supply shocks, replacing previous “Just In Time” models.

To navigate this, industrial companies are advised to lock in long-term supply agreements, secure sufficient inventory, and engage with sourcing partners to manage the transition and assess migration to DDR5 platforms where feasible.

Please be assured that we are working closely with our suppliers to secure additional supply and stabilize delivery schedules. We truly appreciate your understanding and patience as we navigate this difficult situation together.

If you have any urgent requirements or ongoing projects that need special attention, please don’t hesitate to contact us.