DDR4 Price Inversion Investigation: How HBM Chips Ignite the Price Surge of "Outdated" Memory?

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

On July 11, a reporter from Economic Observer, posing as a buyer, visited the Huaqiangbei electronics market in Shenzhen and noticed a contradictory phenomenon: on one hand, there is still demand for DDR4 memory sticks for specific orders such as industrial control and security; on the other hand, most counters still recommended the new generation DDR5 (fifth-generation double data rate memory, which is the successor to DDR4) related products, but merchants were generally cautious in quoting prices for DDR4 and frequently declined demand with reasons such as "out of stock" and "prices change daily."

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

The price of the previous generation product surpassing that of the new generation product has led to a rare phenomenon of "price inversion" in the storage market.

Regarding the deeper reasons for this abnormal phenomenon, TrendForce analyst Xu Jiayuan stated in an interview with Economic Observer that Samsung and SK Hynix are currently in a process conversion period, and "capacity is prioritized to ensure the production of Server DRAM and HBM, resulting in limited bit output for PC DRAM and mobile DRAM."

He believes that the supply side is contracting due to HBM, while the demand side has not decreased synchronously, and this "supply-demand mismatch" is the direct reason for the recent price increase of DDR4.

Several interviewees told the reporter that the reason DDR4, as a previous generation product, has seen prices rise instead of fall, even exceeding those of the new generation products, fundamentally lies in the upstream manufacturers actively reducing DDR4 supply to focus on the high-profit HBM, causing a shortage on the supply side; however, in the downstream market, certain specific industries (such as industrial control and security) have an irreplaceable "rigid demand" for DDR4 due to their product cycles and certification costs.

In addition, Flash Market analyst Yang Yiting also stated to the reporter that the supply tightness of DDR4 products is due to "recent notifications from manufacturers regarding DDR4 EOL (end of life)," but there is still a certain long-tail demand for DDR4 products from terminals such as servers and PCs, leading to an urgent establishment of DDR4 inventory in the downstream.

When the continuous "rigid demand" encounters a sharply contracting "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, while Micron's executives also confirmed the discontinuation plan for DDR4 used in PCs and servers during a public event in June. These three companies account for over 95% of the global DRAM market supply share.

The commercial logic behind this move is very clear: to prioritize the allocation of precious wafer production capacity and R&D resources to high-value products aimed at AI servers, represented by HBM. Financial report information shows that SK Hynix achieved an operating profit margin of up to 42% in the first quarter of 2025, and it is expected that HBM sales will account for more than 50% of its total memory sales in 2025.

This top-down capacity switch quickly transmitted pressure to the downstream of the industry chain.

"For example, if you ask me for 4 yuan for (DDR4) today, it might be 4.5 yuan in a few days; the more you ask, the more expensive it gets," said the market manager of a memory module manufacturer in Shenzhen on July 10.

Additionally, the flash memory market pointed out in its latest report that enterprise customers, such as those in the server sector, have developed a strong "resistance" to high-priced DDR4, and apart from sporadic urgent orders, customers generally refuse to "take over at high prices," forcing the consumer market to accelerate its migration to DDR5 platforms.

So, how did the demand for HBM capacity trigger this "butterfly effect" affecting the entire traditional storage supply chain beneath the market surface?

"Ultimatum"

DDR, short for "Double Data Rate Synchronous Dynamic Random Access Memory," is one of the key core components that determine the operating speed and multitasking capability of electronic devices such as computers and servers. As its fourth-generation product, DDR4 has played an absolutely mainstream role in the market since its launch in 2014, serving as the cornerstone supporting the previous generation of PC and server computing systems for nearly a decade.

From the perspective of product classification, DRAM (Dynamic Random Access Memory) is a large technology category, while the DDR4 and DDR5 commonly referred to in the market are the most widely used mainstream iterative products of DRAM technology in the PC and server fields; HBM (High Bandwidth Memory) is a special high-priced product derived from DRAM technology to meet the high-performance computing scenarios of AI servers.

According to the technological evolution rules of the semiconductor industry, the emergence of the next-generation product DDR5 should, by convention, replace DDR4. Compared to DDR4, DDR5 has significant improvements in transmission speed, bandwidth, single-chip capacity, and power consumption control, better meeting the demands of new-generation CPUs and AI applications for massive data throughput.

Therefore, starting in 2023, the entire storage market has entered a generational transition period from DDR4 to DDR5. However, this transition process, which should have been smooth, gradually descended into disorder after the second quarter of 2025 "The price increase of DAM is very fierce, especially for some models of DDR3 and DDR4, which have seen an increase close to 100%," said the market manager of a storage manufacturer in Shenzhen to reporters. A research report released by the Flash Market on July 8 also stated that some suppliers have violently raised the official prices of DDR4 eTT chips, with increases approaching 50%.

The market frenzy is ultimately reflected in the key product of server memory. The Flash Market pointed out that the spot price of DDR4 RDIMM (Registered Dual In-line Memory Module, a common specification for server memory) has doubled compared to the low point in the first quarter of this year after experiencing a rapid increase. A shop owner in Huaqiangbei told reporters during a visit in early July that there is currently "a lot of speculation in the market and prices are artificially inflated," further exacerbating the price chaos.

To understand the transmission mechanism of this price storm, it is first necessary to clarify the structure of the storage chip industry chain.

This industry chain can be roughly divided into three segments: upstream, which consists of wafer foundries (IDM) with the highest technological and capital barriers, such as the three giants Samsung, SK Hynix, and Micron, which control the entire process from design, manufacturing to packaging and testing, and directly produce the most core raw material—memory chips; midstream, which consists of numerous storage module manufacturers and distributors that purchase memory chips from upstream, and combine them with self-developed or third-party controller chips and firmware algorithms to design and assemble them into final products that consumers and enterprises can directly use, such as Jiangbolong (301308.SZ), Baiwei Storage (688525.SH), Demingli (001309.SZ), and Langke Technology (300042.SZ) in the domestic A-share market, which are representative enterprises in this segment; downstream, which connects to a vast terminal application market, including brand manufacturers of PCs, servers, smartphones, and ordinary consumers who purchase products through retail channels.

Therefore, for module manufacturers and distributors in the mid and downstream of the industry chain, every move by upstream manufacturers affects their nerves.

Flash Market analyst Yang Yiting told Economic Observer reporters: "Recently, upstream manufacturers have successively issued DDR4 EOL (End of Life) notices. Considering that there is still a certain long-tail demand for DDR4 products from terminals such as servers and PCs, downstream urgently established DDR4 inventory, resulting in a tight supply of DDR4 products recently."

During the interview, reporters also learned that the so-called EOL notice is an official document in the semiconductor industry that carries a "final ultimatum" meaning. It indicates that upstream manufacturers will officially stop accepting orders and production for that model and provide a "Last Time Buy" deadline.

For downstream customers, this is akin to a multiple-choice question: either accurately estimate the product demand for the next few years and invest a huge amount of funds for a one-time strategic stockpiling; or immediately invest similarly high R&D costs and time costs to redesign existing products to adapt to the new generation of components Regardless of the choice, it is filled with risks and uncertainties. The market manager of a storage manufacturer in Shenzhen stated to reporters: "Some original manufacturers have significantly influenced market price trends by controlling the supply rhythm and prices of wafer raw materials."

Xu Jiayuan also provided the same judgment, indicating that the original manufacturer's EOL (End of Life) schedule planning has prompted module manufacturers to actively stock up on DDR4 chips.

As one of the core players in the industry, leading storage module manufacturer Jiangbolong also pointed out in a recent investor communication minutes: "Recently, due to the strategic partial exit of storage wafer original manufacturers from the DDR4 business, some DDR4 prices have significantly risen in the short term."

Thus, a panic-driven stocking wave, combined with some speculators hoarding, quickly drained the market's liquidity, ultimately leading to a deadlock of "having prices but no market."

During a visit to Huaqiangbei in early July, reporters learned that since June, after a continuous rise in channel DDR4 prices, the market began to cool down. Some products, due to previous excessive price increases, have led both buyers and sellers into a prolonged tug-of-war and stalemate, resulting in weak transaction activity.

However, in fact, before the price reversal in the second quarter, the entire storage industry had just experienced a brutal downturn cycle.

According to Baiwei Storage's description in its first-quarter report, storage market prices reached a "phase low" in the first quarter of 2025. This market trough was also directly reflected in the performance of midstream manufacturers in the industry chain. According to public financial reports, Baiwei Storage recorded a net loss of 197 million yuan in that quarter, while another leading storage module manufacturer, Jiangbolong, also experienced a net loss of 152 million yuan during the same period.

The market manager of the aforementioned storage manufacturer told reporters that although DDR5 is the future trend, in niche markets such as industrial control, security monitoring, and set-top boxes, where performance requirements are not high but stability and compatibility are extremely important, DDR4 remains a more cost-effective choice. Additionally, reporters learned that some older Intel CPU platforms still in service only support DDR4, which constitutes the underlying support for its demand. It is this rigid demand that provides a basis for market inquiries.

This "rigidity" of demand is rooted in the product characteristics of the niche market itself: unlike rapidly iterating consumer electronics, an industrial control system, an in-car entertainment module, or a security camera motherboard often has a lifecycle of 5 to 10 years. During this period, any slight change in core components may mean a complete redesign of the hardware solution, software re-adaptation, and a lengthy and costly industry certification process. Therefore, for manufacturers in these fields, maintaining supply chain stability throughout the product lifecycle is far more important than chasing the latest technical parameters. The comprehensive cost of stocking up on older DDR4 at a high price often remains lower than the hidden costs of platform replacement and re-certification.

The flash memory market also pointed out that the high prices of DDR4 RDIMM have increasingly made server end customers "reluctant," and apart from unavoidable "sporadic urgent orders," large customers are generally unwilling to "take over at high prices" at this point In the more price-sensitive consumer market, most end customers have chosen to "let go" and switch tracks. In this regard, flash market analysis indicates that the increasingly narrowing price gap, even "inversion," between DDR4 and DDR5 is "forcing" channel customers in the PC market to "upgrade from DDR4 to DDR5." A merchant in Huaqiangbei also told reporters that in the case of a shortage of DDR4 spot goods, they would actively recommend customers to switch to DDR5 products, which have more stable supply and smaller price differences.

Thus, a complex market picture emerges: upstream violent price increases, midstream panic buying, and downstream differentiation among rigid demand, resistance, and forced switching. All these seemingly chaotic market behaviors ultimately point to the same source—HBM.

"Siphon Effect"

At the counters in Huaqiangbei, the price list for DDR4 is updated daily, while thousands of miles away in South Korea and the United States, during the earnings presentations of the world's three major memory manufacturers, this once-profitable pillar is hardly mentioned, as everyone's attention is focused on a new name.

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

In fact, the strategic tilt of storage giants towards HBM is already reflected in tangible financial data and operational goals. Micron's financial report shows that it achieved record revenue in its fiscal year 2025 third quarter, with "HBM revenue achieving nearly 50% quarter-over-quarter growth"; SK Hynix maintained its outlook for "2x year-over-year growth" in HBM demand in its fiscal year 2025 first-quarter earnings presentation and delivered the "world's first HBM4 12Hi samples" to customers in March this year to demonstrate its technological leadership; Samsung Electronics also listed "expanding sales of enhanced HBM3E 12H products" as a core goal in its fiscal year 2025 first-quarter earnings presentation.

Xu Jiayuan told reporters that it is precisely this ultra-high market growth expectation that has led manufacturers to make the decision to "prioritize production capacity for Server DRAM and HBM." Of course, the focus on HBM resources has also directly resulted in "planned" reductions in capacity for traditional product lines, which is a global strategy that spans all product lines of manufacturers.

According to the storage market outlook report released by the flash market on July 2, in terms of DRAM, the demand for LPDDR4X in mobile phones remains significant. After the manufacturers switch production lines, it is expected that there will be an overall supply gap of about 15% to 20% for mobile LPDDR4X, especially for low-capacity LPDDR4X of 6GB and below, which will drive a quarter-over-quarter increase of over 20% in LPDDR4X contracts in the third quarter And it is approaching 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 making way for HBM and DDR5. However, the wafer production capacity of storage manufacturers cannot be expanded indefinitely; an advanced wafer factory requires an investment of hundreds of millions of dollars, and its total capacity is relatively fixed over a period. Under limited total capacity, production decisions become a mathematical problem about costs.

More importantly, compared to traditional DRAM, the manufacturing process of HBM is more complex, requiring not only more wafer area but also additional Through-Silicon Vias (TSV) and advanced packaging processes. This means that the comprehensive capacity and resources consumed to produce a single HBM wafer are much higher than those for a DDR4 wafer of the same size.

In the face of this mathematical problem, when HBM can bring several times the profit, DDR4, whose technology is mature and profit margins have been severely compressed, becomes the first option to be "optimized" out of capacity planning. On the other hand, the strategic adjustment of the three major storage giants, while creating a high-profit era for HBM, has also objectively left a huge vacuum in traditional markets such as DDR4 that needs to be filled.

"International giants like Micron and Samsung are gradually withdrawing from the market competition for some mid-to-low-end or specific types of products, which objectively provides valuable market space and customer introduction opportunities for domestic manufacturers," said the market manager of a Shenzhen storage company.

In the enterprise market, Jiangbolong also stated in its recently released investor communication minutes that with the continuous acceleration of AI applications, customers will consider adopting domestic enterprise-level storage products more due to factors such as "localization, information security, and supply security." The company has the product design and scale supply capability for "eSSD+RDIMM" (i.e., enterprise solid-state drives and server memory modules, both core storage components for data centers) and is actively promoting the TCM (Technology Contract Manufacturing) model to "partially reduce the impact of price fluctuations."

Baiwei Storage also stated in its recently disclosed investor communication minutes that the company is relying on the layout of "integrated R&D and testing" to gain a first-mover advantage in emerging AI endpoint fields such as AI mobile phones, AI PCs, and AI glasses. Its ePOP (a type of embedded storage technology that integrates flash memory and memory chips, widely used in small smart devices such as smartwatches and AI glasses due to its small size, low power consumption, and significant internal space savings through stacking) series products have entered the supply chain systems of well-known companies such as Google, Meta, and Xiaomi.

"Currently, domestic storage wafer factories, storage module manufacturers, storage control chip manufacturers, and testing factories are working together to create a storage industry ecosystem and form an industrial closed loop," said Demingli at its performance briefing in May. With the gradual development and improvement of the domestic memory industry chain, "domestic downstream storage module and control chip manufacturers are ushering in important development opportunities." At present, for China's storage industry chain, the "HBM capacity migration" of the three major original manufacturers may not only be a market reconstruction but also provides a rare opportunity for local manufacturers that have already developed technical strength and market readiness. However, the market leader of a Shenzhen storage manufacturer admitted in an interview that although the exit of international giants has freed up market space, local manufacturers still face many practical challenges. For instance, there is still a certain gap between domestic companies and international giants in high-performance storage fields such as HBM and the most advanced DRAM processes, and R&D and production capabilities need further enhancement.

At the same time, an analyst who has long focused on the semiconductor industry also told reporters that the ability to control the supply chain independently, especially in upstream key manufacturing equipment and core materials, remains a critical bottleneck restricting the development of some local enterprises. Therefore, whether local storage manufacturers can seize the structural market opportunity of DDR4 while addressing the core shortcomings in next-generation technologies such as HBM will be a pressing question they need to answer in this industrial reconstruction brought about by AI.

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