Memory module manufacturer ADATA (3260) held a ceremony today at its Neihu headquarters. Chairman Chen Li-bai stated in an interview that the memory market is expected to enter a new bull market starting next year. “Next year will definitely be good, and the following year may face insufficient production capacity,” so it might thrive for about one and a half to two years.
Regarding the memory market situation, Chen Li-bai said that the reduction in production by the top five NAND Flash manufacturers ranges from 40% to 60%. The accumulated market inventory is expected to be depleted by the end of this year or the end of January next year. Therefore, several original equipment manufacturers have significantly increased their prices within about two weeks, with an increase of around 30%.
At the same time, in terms of DRAM, DDR5 specifications have risen faster than expected, increasing by over 50% from previous lows. Although DDR4 specifications have relatively smaller increases, as profit margins for DDR5 are higher than DDR4 for original equipment manufacturers, they will gradually shift their production capacity towards producing DDR5. This will result in a shortage of DDR4 in subsequent periods; therefore, he predicts that there will also be larger increases in DDR4 during the first half of next year.
Chen Li-bai assessed that next year should mark the beginning of a bullish memory market. If we dare to predict that conflicts between Russia and Ukraine could possibly end within six months and oil and natural gas prices return to normal levels, consumer markets would also recover.
In a gradually balanced supply-demand situation in the memory market or even potentially shifting towards supply shortages due to high demand, controlling sources can benefit revenue and profitability performance. Chen Li-bai pointed out that ADATA has indeed been relatively fortunate this year as it purchased many goods when prices hit rock bottom. By the end of Q3 alone, inventory reached approximately NT$14.4 billion, and it continued to increase in October and November. Most of the profits are expected to be realized next year; therefore, overall performance and gross profit should be better than this year.