Rumors of Memory Price Drops Inconsistent with Actual Supply! Transcend Chairman: Severe Memory Shortage Unlikely to Ease This Year

Chung-wan Shu, Chairman of memory module maker Transcend, stated that the current DRAM and NAND flash memory markets are in a state of severe shortage, with surging AI demand being the main cause, and the tight supply situation is expected to be difficult to alleviate within this year.

Shu pointed out at an investor meeting on Wednesday that in the second quarter of this year, DDR5 prices rose by 40%-50% compared to the first quarter, and procurement demand still could not be fully met.

He emphasized that market rumors of memory prices easing do not align with the actual supply situation from manufacturers like Samsung and Micron Tech; the current supply gap is large, and customers are urging for shipments almost daily.

Shu clearly stated, "The supply gap for DDR4 is widening, and the supply gap for flash memory will definitely continue to widen." In the face of supply shortages, Transcend has adopted a strategy of selectively supporting customers and cannot meet all customer demands. For downstream manufacturers relying on memory module supply, procurement pressure will continue to accumulate.

Capacity Expansion Difficult to Realize in the Short Term, Supply-Side Improvement Remains Distant

Despite market rumors of capacity expansion by some suppliers, Shu believes this is insufficient to alleviate the recent supply-demand conflict.

He pointed out that major DRAM manufacturers such as Samsung, Micron Tech, and SK Hynix will find it difficult to complete capacity expansion within the next year, due to long construction cycles—Samsung has previously stated that building a new plant takes at least two years, and the order lead time for some key equipment has already reached 1.5 years. This means the possibility of increasing production in the short term for Western manufacturers is extremely low.

Regarding the expansion plans of Chinese memory manufacturers, Shu stated that it is unlikely to be realized within this year, and whether capacity can truly be released next year is subject to much market speculation, but "the authenticity is difficult to judge." Based on information provided by suppliers, he judges that the shortage situation for both DRAM and NAND flash memory will be difficult to improve this year.

Combined Demand from AI and Edge Computing Intensifies Memory Scramble

Shu attributes the root cause of this extreme shortage to the rapid expansion of AI demand.

He stated that the rise of AI means that any device equipped with a CPU will inevitably require DRAM and flash memory. At the same time, edge AI and automated equipment are also competing for memory resources, leading to a comprehensive scramble for supply. He believes that DRAM and flash memory entered a state of extreme shortage starting in September last year, with AI demand being the key driving factor.

Memory demand for industrial automation and embedded applications is also gradually increasing, further exacerbating the supply-demand conflict. Regarding the possibility of reducing memory demand through technical means, Shu believes the effect is limited, and pointed out that the introduction of HBF technology will increase, not replace, the demand for flash memory, and its application scenarios are different from HBM.

Tightening Supply of MLC Products, Transcend Completes Final Procurement Ahead of Schedule

In terms of NAND flash memory product structure, Shu disclosed that among Transcend's current product portfolio, SLC is no longer in use, MLC accounts for about 10%, and TLC accounts for about 90%.

Notably, major MLC suppliers Kioxia and SanDisk have successively announced their exit or discontinuation of MLC products, which is expected to further tighten supply in this market segment.

In response, Transcend has taken proactive measures. Shu stated that the company completed its "last-time buy" for industrial-grade MLC products last year, securing inventory from manufacturers like Samsung and SanDisk sufficient to meet demand until the end of this year, ensuring that existing customer supply is not affected.

Adhering to Direct Procurement from Manufacturers, Avoiding Speculation in the Spot Market

In terms of procurement strategy, Shu emphasized that Transcend's business model involves almost exclusively direct transactions with manufacturers, avoiding the volatile spot market to mitigate risks associated with sub-standard goods, parallel imports, and downgraded products.

He pointed out that while prices also increase in transactions with manufacturers, supply is more stable, and price adjustment cycles are longer—monthly or quarterly rather than daily fluctuations.

Shu also stated that the company has long-term agreements with suppliers, but even these cannot guarantee full supply in the current extreme shortage environment. He explicitly stated that he does not approve of earning speculative profits and will continue to focus on enhancing service value, production efficiency, and management performance in the future.

Facing supply pressure, downstream customers have generally adopted a strategy of specification downgrading, such as changing 16GB memory to 8GB, or reducing 256GB storage to 128GB, to control procurement costs.

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