TrendForce predicts that traditional DRAM contract prices will rise 10%-15% quarter-over-quarter in the fourth quarter, while an ISM survey shows new supply shortages in DRAM, PCs, and SSDs. Server manufacturers, whose orders are primarily for enterprise customers, typically have contracts that allow for repricing between quote and delivery, enabling them to pass on memory costs to customers more quickly. HPE previously stated that DRAM and NAND now account for more than half of the material costs for traditional servers. Dell's server and storage business saw its operating margin rise to 15.0% in the quarter ending July from 8.8% in the same period last year, with revenue increasing by 89% to $31.8 billion, as customers simultaneously purchased more DRAM and storage configurations. The PC market, however, faces the constraint of fixed price bands; price increases could directly lead to a loss of sales. While HP's PC revenue grew by 18%, commercial and consumer PC sales declined by 14% and 19% respectively, and its operating margin fell from 5.4% to 4.6%. Dell's PC profit margin rose to 7.6%, but the company expects it to fall to around 6% in the next quarter. Some PC brands have begun to control costs by reducing the SSD capacity of their mainstream models. During periods of supply shortage, upstream players like Samsung, SK Hynix, and Micron wield greater pricing power, while downstream profit margins ultimately depend on who can pass on costs to customers. The market currently expects HP's EPS to decline by 3%-5% in fiscal year 2027, while HPE's is projected to grow by 22%-23%. Rising memory prices are widening the differences between the business models of servers and PCs.
