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Your Questions Answered: What’s the Deal with DDR4 Server Memory Costs?

MichaelPratt

Many are asking why the cost of server memory is increasing. In this blog, we begin to explore what’s driving up the cost of DDR4 server memory.

Blog_server_memory_costs.jpgAh, supply and demand. A fundamental concept taught in Economics 101 and the backbone of a market economy. In case you didn’t take Economics 101, supply represents how much the market can offer, while demand refers to the quantity of a product or service desired by buyers. When the supply surpasses demand, prices decrease. When demand outpaces supply, prices go up.

Why is the cost of server memory going up?

I have been asked many times recently about the escalating cost of server memory. To answer that question, I need to take you back a few years. Revenue for the memory industry increased for eight consecutive quarters during 2013 and 2014. Unfortunately, investment in production facilities did not keep pace, especially as revenue began to dip in 2016. This reduced facility investment coincided with a shift in production from server memory to NAND flash, which is used in mobile phones.

Today, the need for memory components is increasing rapidly as demand for both cloud computing services and mobile phones intensifies, causing competition for the smaller amount of memory being produced. Although suppliers have started to adjust production capacity to increase DRAM output, production has not kept pace with the need for DDR4 memory.

To illustrate, analysts estimate that global memory supply will grow by just 20% this year–far below an estimated demand increase of close to 22%. In other words, the current supply of memory manufacturing capacity is not enough to meet demand.

What does this mean for my business?

So what does this mean for those dependent on DDR4 memory? Unfortunately, DDR4 memory costs will continue to increase as availability gets tight. It’s likely that the cost of all products that use memory (including PCs, servers, and mobile phones) will increase significantly, at least until supply and demand begin to balance.

The good news is that memory supply is poised for another sustained upswing as memory suppliers look to expand future margins through investments in production. The emergence of China as a new memory supplier is also a good sign that memory production will ramp up to meet demand. In the meantime, we will continue to use our mad Economics 101 skills to analyze supply and demand and secure memory at the best prices available.

If you are interested in learning more about DDR4 server memory, contact HPE or visit our server memory web page.

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About the Author

MichaelPratt

Michael Pratt’s passion is helping customers go further. His job is making products that make servers go further. He spends his days connecting the two.

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