Memory prices have finally begun to soften after reaching elevated levels. An investigation in Shenzhen's Huaqiangbei on March 31st revealed that memory modules, particularly DDR5 specifications, have recently seen price reductions, with some products dropping by as much as 30%. Concurrently, the previous increase in storage product prices, which had driven up the recycling value of used mobile phones, has also started to reverse, with buyback prices gradually declining.

However, this wave of price cuts does not affect all storage products. Prices for SSDs remain relatively stable, with only minor decreases for some items, while mechanical hard drive prices continue to hold firm at high levels. It remains difficult to conclusively determine if the widespread shortage and price inflation for storage products—driven by AI data centers absorbing significant production capacity—has reached a turning point. Nevertheless, the price softening observed for some storage products after months of increases may indicate a shift in market supply and demand.

Memory Module Prices Experience Sharp Decline Following months of rising storage costs that began to impact orders for PC assemblers by February, pressure from the demand side has recently triggered a significant price correction for memory modules. Merchants in Huaqiangbei described the drop as rapid, occurring within just a few days, with prices for some DDR4 and DDR5 modules falling by 100 to several hundred yuan.

One merchant noted that the price decline has attracted customer inquiries. For example, a 32G server memory module that previously cost over 3,000 yuan at the peak has dropped by 100-200 yuan in recent days. Current inquiries indicate an 8G DDR4 module costs just over 300 yuan, a 16G DDR4 module around 700 yuan, and a 16G DDR5 module approximately 1,200 yuan. Multiple merchants reported that DDR5 modules, which saw the steepest previous increases, are now falling fastest. One merchant stated that an 8G DDR4 module has dropped from 500 yuan to just over 300 yuan, a reduction of over 100 yuan, while a new 16G DDR5 module has fallen from 1,600-1,800 yuan to around 1,200 yuan, a decline of several hundred yuan, representing a drop of about 30% for new DDR5 modules.

During this period of price volatility, the discount for some new memory modules has even exceeded that for used products. While a used 8G DDR4 module might sell for 360 yuan, some merchants are offering new 8G DDR4 modules for as low as 330 yuan. Compared to the roughly 30% drop for some new 16G DDR5 modules, used 16G DDR5 modules are still priced above 1,000 yuan, reflecting a decrease of only about 20%.

Merchant opinions on the reasons for the sharp decline and the future price trajectory vary. Some speculate that prices may rebound after the Qingming Festival holiday, while others predict that the initial price softening could trigger panic selling. One merchant cited a recent article suggesting that AI servers, which previously relied heavily on memory, might now require less, pointing to market rumors linking the price drop to Google's recent release of its TurboQuant technical solution. This key-value cache compression scheme claims to reduce long-context key-value cache demands for large language model inference by a factor of six, leading to market concerns that AI-driven demand for storage hardware may be weakening.

In contrast to memory modules, SSD prices, which also experienced significant increases, have seen relatively minor recent adjustments, while mechanical hard drive prices remain firmly at high levels. Inquiries reveal that an external 1T USB SSD currently costs around 700 yuan, and a 2T SSD about 1,300 yuan. Feedback on SSD price changes is mixed; some merchants report no decrease, while others note a drop of over 100 yuan in recent days. Mechanical hard drive prices are described as stable or even slightly increased.

Used Mobile Phone Recycling Prices Fall The fluctuation in storage product prices has also caused volatility in mobile phone recycling values. Previous market reports indicated that memory price increases had pushed up prices for used phones. Investigations at Huaqiangbei recycling stalls confirm that the peak occurred about two weeks ago, with phones recycled for their memory, metal, and other chip components having since given back most of those gains.

According to merchants, the phones whose values increased due to memory inflation were primarily non-functional scrap phones, such as low-end "senior phones," whose recycling price rose from just a few yuan to 20-30 yuan at the peak. These scrap phones are valued based on the capacity of their memory and storage and the manufacturer of the memory chips.

For a functional old phone with 8G memory and 256G storage, a merchant focused on component recycling offered around 270 yuan, while two merchants evaluating it for resale as a whole unit offered 350 yuan. One recycler stated that prices have "crashed" since peaking two weeks ago, with a phone now fetching only about 20 yuan more than before the Spring Festival. A phone currently priced over 200 yuan was quoted at over 300 yuan two weeks ago.

This merchant explained that at the peak, the price difference between a functional and a non-functional old phone was only about 10 yuan, as the primary goal was to harvest chips and memory for refurbished or no-brand phones for export, with phone performance and screen condition being irrelevant. Other merchants noted that memory and other components salvaged from these phones are purchased by manufacturers for assembly into products like storage devices.

While phone recycling prices have fallen from their recent peak, some merchants note they remain higher than last year's lows. For instance, a phone now priced over 200 yuan might have fetched only 100 yuan during the previous low.

Reasons cited for the decline in phone recycling values include a saturation of market demand after a large volume of old phones was recently sold, eliminating the previous premium. Others point to Google's technical solution potentially reducing memory demand, suggesting that if memory prices stop rising, the premium for old phones based on their memory content will disappear, potentially leading to further declines in recycling prices.

Complex Market Sentiment The price changes for memory and used phones reflect complex market sentiment following the steep rise in storage product prices. Industry views on whether storage prices will remain firm and when they might fall differ.

Zhao Haijun, Co-CEO of SMIC, believes consumer storage products will see a relatively quick reversal of the supply shortage and price inflation. In February, he attributed market anxiety to amplified demand driving up prices and intermediaries hoarding inventory. He argued that the significant AI-driven demand is focused on HBM and packaging/test, not on shifting all front-end wafer production to HBM. He predicted that memory capacity will increase, with more front-end wafer production capacity becoming available within nine months, which will be directed to consumer products, and inventory held by channel distributors will be released.

In contrast, Gou Jiahua, General Manager of memory controller chip maker Silicon Motion, stated that 2026 will be a very painful year of shortages and price hikes, but this year is not the worst; next year will be. He dismissed predictions of a market turning point in the second half of this year as impossible. He indicated that tight capacity conditions in North America are not expected to ease until 2028, primarily due to new fabs from Samsung and SK Hynix reaching mass production and Micron's second Boise factory gradually coming online in the second half of 2028. Most storage manufacturers remain cautious about capacity investment.

Gou also highlighted differences in price acceptance and resource access among buyers. Well-funded North American data center giants can accept price increases and prioritize securing supply, with even 128TB drives priced near $30,000 finding buyers. Domestic internet giants have less access to abundant resources, are reducing demand for very high-capacity products like 128TB drives, and are instead extending storage lifespan and seeking support from overseas suppliers.

For ordinary consumers, price acceptance varies. Gou noted that slow, prolonged price increases, such as once every month or two, are often acceptable, but monthly increases of 50% are unsustainable for most businesses and consumers. He suggested that the price hike trend will halt when users can no longer accept it. He added that upstream NAND flash manufacturers are seeking truly robust demand, believing that sustained market acceptance after a price increase indicates real demand, whereas rejection suggests otherwise.

Debate continues over whether storage prices will keep rising and how demand will evolve. The market is watching to see if Google's compression technology will impact memory demand. Countering the narrative of reduced demand, Morgan Stanley pointed out that the technology only targets KV cache, while AI model context windows are growing 30x annually, far outweighing any compression gains. J.P. Morgan cited the "Jevons paradox," suggesting that technological efficiency improvements often stimulate a surge in demand rather than reducing consumption.

Recent stock prices for several storage companies have been volatile. From March 26 to March 30, Micron Technology fell 15.74%, SanDisk dropped 15.54%, Western Digital declined 15.02%, and Seagate Technology decreased 12.29%. On March 31, several A-share storage stocks also fell: Shenzhen Longsys Electronics Co.,Ltd. dropped 5.69%, Biwin Storage Technology Co.,Ltd. fell 8.62%, Gigadevice Semiconductor Inc. declined 6.94%, and Montage Technology Co.,Ltd. decreased 5.09%.