Spot Memory Prices Are Running 4 Times Contract Prices. That Is Not What a Cycle Peak Looks Like.
Would buyers really pay four to five times the contract price for memory chips if the boom were topping out?
Overview
One quick way to test whether a boom has peaked is to look at what buyers are still willing to pay. A 36-gigabyte chip of HBM3E, the high-bandwidth memory (HBM) that feeds artificial intelligence (AI) processors, sells for about $2,100 on the spot market, where chips trade for immediate delivery.
Long-term supply agreements price the same product at roughly 500,000 to 700,000 won (about $370 to $510), according to reporting this week from the Seoul Economic Daily. In other words, buyers who need memory today are paying four to five times the contract price to get it.
Details
Memory is a famously cyclical business. But cycles turn when supply catches up with demand, and prices are where that shows up first. And from the spot market to Korea's export data, the prices are pointing the other way.
Source
Originally published at www.fool.com.