The price of dynamic random access memory (DRAM) chips may go up for the first time in two years as manufacturers are mulling raising the contract prices amid the high demand for high-performance memory chips for generative artificial intelligence (AI).

According to market research firm TrendForce on Thursday, DRAM manufacturers are in talks with their customers to raise the prices for the third quarter.

The three DRAM majors Samsung Electronics, SK hynix, and Micron Technology Inc. determine contract prices with their customers every quarter.

The average price of DRAM chips has plummeted by 80 percent over the last year as finished-product companies for computers and servers made adjustments on inventory due to the slow economy. The manufacturers, however, have recently had high bargaining power on price as demand has outpaced supply in specific DRAM chips.

“The negotiations on price are underway, and the final prices are expected to be set by September,” said Kim Dong-won, a senior analyst at KB Securities Co. “The market is likely to be rearranged in favor of suppliers rather than customers.”

Industry sources said the products with a high chance of price increase include high-value chips, such as High Bandwidth Memory (HBM) and Double Data Rate 5 (DDR5). Demand for HBM3, in particular, first developed by SK hynix, is high.

HBM is a stacked memory technology that provides high-speed processing of data. SK hynix’s HBM3 has been used in the graphics processing units (GPU) of Nvidia Corp., which holds more than 80 percent of the market share in the world’s GPU industry.

Media reports noted that Nvidia asked Taiwan Semiconductor Manufacturing Co. (TSMC) to rush GPU orders amid surging demand for generative AI services.

Nvidia is also expected to have asked SK hynix to produce the equivalent amount of HBM3, according to industry sources. HBM3 is used to produce the MI300X AI Accelerator chips unveiled by Advanced Micro Devices Inc.

By Lee Sae-ha and Han Yubin

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