South Korea / Japan trade war could lead to DRAM memory price spikes

While the U.S. and China are implicated in a trade war for global economic dominance, South Korea and Japan have recently started waging a trade war of their own, and this one may have serious repercussions on key semiconductor components like DRAM memory modules. NAND modules used for SSDs and DRAM chips used for PC RAM modules reached their lowest prices back in spring 2019, but analysts predicted that prices could once again rise, and it looks like the Korean / Japanese trade war is accelerating the price appreciation process.

The tensions between the two nations began escalating when a South Korean court ruled that Japanese company Nippon Steele benefitted from Korean forced labor during World War II and is now liable to pay US$89,000 to each and every Korean survivor. Japan retorted demonstrating that these damages were covered in the 1965 accord and Japan’s prime minister Shinzo Abe threatened with drastic economic measures in case the rulings are not reversed. As a preemptive measure, Japan already put a stranglehold on a series of chemical compounds such as photoresist layers and hydrogen fluoride used by Samsung and SK Hynix for memory and semiconductor manufacturing.

Seeing that South Korea and Japan are not willing to come to an agreement any time soon, NAND and DRAM manufacturers jacked prices by as much as 15% in the last few weeks and more price spikes fueled by the increased demand for DDR4 memory caused by the recent release of the Ryzen 3000 CPUs may follow throughout the remainder of 2019. According to Bernstein analyst Mark Newman, South Korea produces three quarters of the world’s memory supply and prices may climb back up to 2017 levels very shortly. Even TSMC, which is based in Taiwan, issued warnings about upcoming photoresist layer shortages.