Memory Module Makers Postpone Customer Orders

Due to the persistent IC shortage, memory module makers are seeing prices stagnate due to an inability to meet demand. But not all chip price growth is slowing...

Chase Correll

2 min read
Memory Module Makers Postpone Customer Orders

Spotlight:

  • Memory device orders postponed, according to Team Group
  • Projected price-growth stagnation for the memory industry
  • Gaming to drive most sales for memory module makers
  • Price increases for other chip devices

Team Group and other manufacturers of memory modules have had to postpone fulfilling customer orders due to ongoing IC shortages and persisting end-market demand. The result could see slowed momentum for memory price growth in 4Q21. And it's not just the memory module makers being affected, chip suppliers and downstream distributors are also seeing a rise in delivery disruptions due to the ongoing shortage of ICs like controller chips.

Despite a potential for stagnated price growth, memory module and IC manufacturers remain optimistic due to consistent demand. As of now, the primary driver of demand is for high-capacity memory devices used in 5G-related applications such as servers, mobile devices, and even gaming.

In fact, gaming might be the saving grace for companies like Team Group, which expect holiday sales to be driven by gaming devices that require top-notch memory devices. By the end of the year, Team Group expects sales of its gaming memory devices to be the primary factor in the company's sustained revenue growth for 2021.

DRAM modules and flash memory products will remain the marketing focus for many memory module manufacturers, which make up 80% of Team Group's total sales.

Founded in Taiwan, Team Group offers further evidence as to just how reliant the IC/semiconductor industry is on the island country.

Yet while memory price growth is coming to a halt, other chip prices are set to soar in 4Q21 and likely will continue to rise heading into 2022.

According to industry research, display driver integrated circuit prices are set to rise by up to 50% compared to 2020.

In addition, the following electronic component and service prices are set to increase:

  • Copper by 40%
  • Contract chipmaking services by 30%-40%
  • Microcontroller chips by 30%-40% (with extremes of up to 400%)
  • Power management chips by 30%-40% (with extremes of up to 500%)
  • Chip packaging services by 15%-20%
  • Wafer materials by 5%
  • Advanced chipmaking services by 8%-10%

What could be causing these steep price increases?

According to veteran semiconductor analyst Mark Li, the explanation is simple:

The most important factor in any price determination is and always will be demand.