Bank of America Bullish on Memory Market Despite Headwinds! DRAM Average Price to Surge 21% in Q3? Is AI Memory Demand Still Hot?

Recently, market concerns arose that memory manufacturers' Q3 earnings might fall short of expectations due to average selling prices (ASP) failing to meet consensus. However, the latest channel survey from Bank of America Global Research's technology industry analysis team has overturned this pessimism. The report indicates that DRAM average prices in Q3 are expected to rise by 21% quarter-on-quarter, significantly exceeding the consensus forecast by market research firm TrendForce.

Based on recent industry channel interviews, Bank of America's team identified five key observations suggesting DRAM prices in Q3 will rise more than expected.

First, server DRAM price increases are exceeding expectations. Driven by strong demand for high-speed LPDDR5, prices are rising between 20% and 30% quarter-on-quarter, surpassing the market's initial expectation of "under 20%."

Second, spot market demand has fully rebounded. Not only mainstream DDR5, but even older-spec DDR4 is seeing strong spot demand, with prices continuing to climb in July.

Third, product structure upgrades are occurring in the high-end market. Customer ordering focus is shifting from cost-effective HBM3E to higher-priced HBM4, further pushing up overall average prices.

Fourth, the price protection effect of long-term contracts (LTA) is weakening. Currently, DRAM sold under long-term contracts accounts for less than 50% of total sales, while non-LTA sales have risen to 60%–70%. Even orders protected by long-term contracts are seeing typical quarter-on-quarter price increases of 5%–10%.

Fifth, some end manufacturers are urgently placing additional orders due to tight inventory. This indirectly confirms that both standard DRAM and NAND are seeing quarter-on-quarter price increases exceeding 20%.

BofA vs. Market Consensus: Q3 Outlook Turns Optimistic

Comparing BofA's and TrendForce's forecasts reveals key differences.

DRAM

TrendForce estimates that traditional DRAM average selling prices in Q3 2024 will rise 13%–18% quarter-on-quarter. Including HBM (High Bandwidth Memory), overall DRAM average selling prices are expected to increase 8%–13%.

In contrast, BofA is more optimistic, forecasting a 21% quarter-on-quarter increase in global DRAM average selling prices—higher than TrendForce's estimate. For Q2, BofA estimates a 45%–50% increase, slightly below TrendForce, while Q4 is expected to maintain high single-digit percentage growth.

NAND

TrendForce forecasts NAND average selling prices to rise 10%–15% quarter-on-quarter in Q3, slowing to 0%–5% in Q4. Q2 prices are estimated to rise 55%–60%, slightly revised down from prior forecasts.

BofA forecasts global NAND average selling prices to rise approximately 65% in Q2, exceeding TrendForce's estimate. Q3 is expected to rise another 15%, with Q4 remaining largely flat.

Spot Market: DRAM Rises for Eighth Consecutive Week, Prices at Historical Highs

DRAM spot prices have now risen for eight consecutive weeks, completely reversing the pessimistic sentiment from two to three months ago, when many believed "$35–40 was the ceiling."

Previously, some brand manufacturers, unable to bear the high spot prices (with procurement costs around $5 at the time), temporarily cut production of PCs, tablets, and smartphones to resist price hikes. Now, they have shifted to actively replenishing inventory, preparing early for the upcoming September and Q4 sales season.

However, the report notes that spot trading volume accounts for only low single-digit percentages of global supply, resembling emergency orders from brand manufacturers rather than mainstream transactions.

Nonetheless, current DDR5 and DDR4 spot market trends still point toward a ~20% quarter-on-quarter increase in Q3 contract prices.

NAND spot markets are also showing signs of price recovery. This week, 1Tb wafer prices rose 4% week-on-week, seen as a positive indicator that Q3 NAND average prices could exceed a 10% increase.

The report also notes that Japanese memory makers underperformed the global average in Q2 average prices. However, with both spot and contract prices rising in July, it is too early to conclude their Q3 earnings will miss expectations.

Key Spot Prices (Latest Weekly Data)

Item: 16Gb DDR5, Price (USD): 49.2, Weekly Change: +3%, Quarterly Change: +28%, Yearly Change: +712%

Item: 16Gb DDR4, Price (USD): 80.1, Weekly Change: +3%, Quarterly Change: +16%, Yearly Change: +829%

Item: 8Gb DDR4, Price (USD): 39.9, Weekly Change: +6%, Quarterly Change: +21%, Yearly Change: +685%

Item: 4Gb DDR4, Price (USD): 12.9, Weekly Change: +4%, Quarterly Change: +81%, Yearly Change: +426%

Item: 1Tb NAND Wafer, Price (USD): 25.1, Weekly Change: +4%, Quarterly Change: -3%, Yearly Change: +397%

Item: 512Gb NAND Wafer, Price (USD): 19.2, Weekly Change: -1%, Quarterly Change: -9%, Yearly Change: +617%

AI Demand Remains Strong: TSMC and ASML Earnings Provide Tailwinds, Indirectly Boosting Memory Demand

TSMC (2330-TW) delivered strong Q2 results, with revenue reaching $40 billion, up 34% year-on-year. Operating margin was 60%, and gross margin was 68%. During its earnings call, the company projected Q3 revenue growth of 46% year-on-year, with full-year revenue growth estimated at around 40%. The 2nm process is progressing smoothly toward mass production.

In capital expenditures, TSMC raised its full-year 2026 capex forecast to $60–64 billion and announced an additional $100 billion investment in U.S. facilities—both record highs.

The report highlights that TSMC's AI chip customers have strong demand for advanced HBM, SOCAMM (Small Outline Compressed Memory Module), and enterprise SSDs, which will continue to drive high-end memory demand.

Semiconductor equipment leader ASML (ASML-US) also delivered better-than-expected results. Q2 revenue was €9.3 billion (up 21% YoY), driven by strong contributions from installed base maintenance. The company guided Q3 revenue to €11.5 billion (up 53% YoY) and Q4 to €14.4 billion (up 48% YoY). Q2 gross margin was 54%, operating margin 37%, with targets of over 55% and 40% respectively for H2.

Regionally, Q2 system sales were 43% South Korea, 30% Taiwan, 14% China, and 9% U.S. Due to export controls, Chinese chipmakers have reduced capex, shifting order momentum toward logic chipmakers in Taiwan.

Management remains optimistic about next-gen AI chips and High NA EUV, expecting advanced logic process expansion to indirectly boost配套 memory orders. Notably, ASML's revenue share from memory-related equipment has steadily increased over the past three years, now approaching the scale of logic chip equipment.

Supply Chain High-Frequency Data Also Positive

South Korea's semiconductor export momentum remains strong. In the first ten days of July, exports reached $11.2 billion, up 1.3% from the previous month. Growth has slightly moderated but remains at historical highs, with six consecutive months of triple-digit YoY growth—up 193% YoY.

Taiwan's tech firms also reported strong June revenues. Logic, foundry, and ODM manufacturers led quarter-on-quarter growth. World (5347-TW), MediaTek (2454-TW), and Quanta (2382-TW) posted QoQ increases of 41%, 22%, and 24% respectively.

Year-on-year, memory makers showed the strongest rebound: Nanya Technology (2408-TW) surged 621%, Transcend (2451-TW) up 382%, Phison (8299-TW) up 301%, while TSMC posted a steady 68% increase.

China's IC imports also hit a record high. June import value reached $59.6 billion, up 72% YoY. Import volume rose only 7% YoY, indicating price increases drove the surge. Breaking down May data, memory chip imports reached $30.8 billion, accounting for 54% of total IC imports and up 249% YoY—another record.

China's smartphone market shows brand divergence. May shipments were 26.8 million units, up 19% YoY. Recovery is evident despite DRAM shortages, but sustainability remains uncertain.

For Q2 overall, shipments declined 4.3% YoY. Apple (AAPL-US) and Huawei grew 19%–24% YoY, while other major brands saw 10%–22% YoY declines.

In market share, Huawei jumped from 18% in Q2 2024 to 23%, with Apple close behind. Most Chinese domestic brands saw clear market share losses.

Price Overview: DRAM at Multi-Decade Highs