Memory more than half the cost of parts for low-priced phones... pressure to raise prices

(Seoul = Yonhap News) Reporter Park Hyeong-bin = Due to the surge in memory semiconductor prices due to the increase in demand for artificial intelligence (AI), the proportion of memory in the component cost of low-priced smartphones was found to have more than doubled in one year.

According to market research firm Counterpoint Research on the 11th, memory accounts for 54% of the total cost of parts (BoM) of low-priced smartphones in the third quarter of this year, up 34 percentage points from the same period last year (20%).

This is due to the rapid increase in demand for high-performance memory, especially in AI data centers, and as semiconductor manufacturers focus their production capacity on high-value products, leading to an increase in the price of memory for smartphones.

Counterpoint Research diagnosed that rising memory prices are putting pressure on the profitability of smartphone manufacturers and leading to increases in consumer selling prices. It was calculated that the average global retail sales price of smartphones has increased by 20% this year.

It is predicted that the burden on consumers will increase, especially in emerging countries that are highly dependent on low-priced products.

The upward trend in memory prices is expected to continue until next year.

According to a memory price tracking report released by Counterpoint Research this month, price increases in the fourth quarter slowed compared to the third quarter, but there are signs of further increases in early negotiations for a supply contract in the first quarter of next year.

While server DRAM is leading the price increase, mobile memory prices are expected to remain flat in the fourth quarter and rise significantly in the first quarter of next year.

On the other hand, memory suppliers Samsung Electronics and SK Hynix [000660] are enjoying the effect of increased sales due to price increases.

According to Counterpoint Research, global DRAM sales in the third quarter of this year surged 369% compared to the same period last year, reaching close to $200 billion.

Samsung Electronics maintained first place with a 38% market share based on sales, and SK Hynix increased sales by more than 40% compared to the previous quarter.

The average selling price (ASP) of DRAM has risen to $1.9 per gigabit (Gb). Counterpoint Research analyzed that the current market is growing due to price increases rather than volume expansion, as the growth rate of DRAM shipments is only about 4%.

As it is difficult for major memory manufacturers' new production facilities to begin full operation until 2028, it is expected that supply shortages and strong prices will continue for the time being.