Beijing Junzheng: DRAM prices to rise in Q3, potential for further increases in Q4
Beijing Junzheng recently indicated during an institutional survey that DRAM prices have seen significant increases. Domestic clients began adjusting prices in the first quarter and continued this trend into the second quarter, with international clients also starting to follow suit. This pricing trend is expected to drive revenue and gross margin growth in the second quarter. The company anticipates further price hikes for DRAM in the third quarter, with pricing policies for the fourth quarter to be determined in Q3. However, current observations suggest continued tight supply in Q4, making further price adjustments possible. The company also noted that some SRAM chips experienced price increases in the second quarter as clients began substituting some DRAM solutions with SRAM products. NOR Flash prices also rose in the first and second quarters, though the extent of these increases was less than that for DRAM. While NOR Flash capacity is also tightening, the situation is considerably better than for DRAM. The company's Flash product line achieved substantial revenue growth in Q1, largely driven by increased sales volume. Pricing for the third quarter will be determined based on specific products and client agreements, meaning not all prices will necessarily be adjusted. Due to ongoing increases in memory chip prices, Beijing Junzheng expects sequential gross margin growth across all quarters.
The semiconductor memory market, particularly DRAM, is experiencing a supply-demand imbalance leading to price escalations. Beijing Junzheng's strategy appears to capitalize on this tightening market by implementing phased price increases across its DRAM and SRAM offerings. While NOR Flash also sees price adjustments, its comparatively less severe capacity constraints suggest a more stable, albeit still favorable, market dynamic. The company's projected sequential gross margin growth across quarters indicates a successful pass-through of rising costs and potentially enhanced profitability. Investors will monitor the sustainability of these price hikes, considering potential shifts in demand or supply chain dynamics in the medium term, as well as the company's ability to manage inventory and production effectively amidst these volatile conditions.
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