It is expected that it will take a quarter or two to resolve the inventory overhead resulting in an effect on ASP DRAM servers, estimated at a 13-18% quarterly decline in the fourth quarter.
Barebone server production and entire server shipments for 3Q20 are expected to decrease by 10% QoQ and 4.9% QoQ, respectively.
Shipments are expected to resume in the fourth quarter, but at a lower level than in the second quarter.
Server DRAM supply has been steadily increasing as manufacturers considered it a good market, but with server orders declining, there is now excess inventory of DRAM per server.
Server makers won’t buy because they expect prices to drop. The exception is Huawei, which aggressively purchased server DRAMs to build inventory ahead of US supply checks scheduled for mid-September.
The third quarter could see a 15% drop in server DRAM prices followed by a 13-18% drop in the fourth quarter.