DRAM demand for server applications has started showing weakness with related chip prices trending downward, according to market observers. Nevertheless, the outlook for server DRAM demand this year remains optimistic, as the data center sector looks promising.

DRAM demand for mass-market applications has already fallen since around the latter half of third-quarter 2018, with related chip prices starting their downward trend in the fourth quarter of the year, the observers indicated. Server DRAM memory was previously regarded as the only segment able to keep their price growth going through 2019.

However, server DRAM prices have begun to drop recently, the observers continued, attributing it to a combination of negative factors including an economic slowdown in China, overall market demand weakness and unfavorable global trade conditions.

Micron Technology at its last earnings call disclosed revenues generated from the data center market have slid from the record high set in the company's fiscal fourth-quarter 2018 ended August 30, due primarily to inventory adjustments at its customers. "We expect this headwind will persist for a couple of quarters," said company CEO Sanjay Mehrotra. "We are seeing some cloud customers go through a digestion period following very strong growth over the last two years."

Nevertheless, Mehrotra expressed optimism about server DRAM demand in the long term. "We believe we are still in the early innings of cloud growth and long-term end customer demand trends remain strong in this market."

Fellow DRAM company Nanya Technology has put increased focus on server DRAM memory. The Taiwan-based firm started shipping in small volume server DRAM chips in the fourth quarter of 2018 after having its 8Gb DDR4 products qualified by a US-based data center vendor. Nanya expects sales of its server memory chips to account for over 10% of company revenues by the end of 2019.

Innodisk, which develops and manufactures industrial-class storage modules and solutions, believes that emerging technologies like AI and 5G will be stimulating the server market growth. The global market for servers is set to continue its growth in 2019.

Fellow memory module company Team Group is also optimistic about demand for servers in 2019. Server memory demand is expected to pick up and rise substantially in the third quarter of 2019 leading to 15-20% on-year growth in the overall demand for the year.