Memory chip prices are expected to remain in free fall until the first half of 2023.

In short: Memory chip prices are expected to continue to decline in the first half of 2023 and possibly beyond. Market intelligence provider TrendForce told The Wall Street Journal that DRAM prices are likely to fall 20% in the first quarter and 11% in the second quarter. At the same time, NAND flash prices are expected to decline by 10 and 3 percent in the first and second quarters, respectively.

Over the last three-month period (October-December 2022), DRAM and NAND flash prices have fallen by 23% and 28%, according to TrendForce.

Memory chip prices peaked during Covid thanks to strong demand for consumer electronics, but began to fall towards the end of 2021. Rising interest rates, combined with geopolitical uncertainty due to the Russo-Ukrainian war and sporadic Covid lockdowns in China, have only exacerbated the situation in 2022.

research firm believes The combination of high interest rates, rising inflation and a weak global economy will continue to weigh on consumer and corporate spending on devices such as smartphones, PCs and servers in the coming months, all of which use both types of memory. The situation could put additional pressure on the tech industry, which is already struggling with investment and job cuts.

Earlier this month, Samsung warned that operating income for the October-December quarter is expected to fall 69 percent from the same period a year earlier. Analysts at FactSet expect memory chip maker SK Hynix to report a fourth-quarter loss of about $661 million later this week. Intel in its latest quarter reported a 32% drop in revenue compared to last year.

How long the downturn lasts largely depends on how fast consumer spending picks up again. Demand for smartphones has been weak over the holidays, but Samsung may be able to jump-start sales in 2023 with a new wave of products expected to be announced during the February 1st Unpacked event. year, and Apple’s iPhone 15 will almost certainly arrive in September.