At the moment, the DRAM market has formally entered a new cycle of rising prices, and 2Q21 will see larger QoQ price increases compared with 1Q21, according to TrendForce’s latest investigations. Looking ahead to 2Q21, shipments of various end products are expected to remain fairly strong. At the same time, clients in the data center segment will resume large-scale procurement. Hence, DRAM buyers across different application segments will be under pressure to stockpile. After experiencing QoQ increases of 3-8% for 1Q21, the average contract prices of different kinds of DRAM products are forecasted to rise more significantly by 13-18% QoQ for 2Q21.

PC DRAM contract prices are projected to rise by 13-18% QoQ due to urgent demand from notebook manufacturers driven by bullish notebook market

Notebook computer production on the whole will maintain a fairly healthy momentum in 2Q21. The demand for PC DRAM products therefore continues to grow as PC OEMs have been raising their annual production targets. Since buyers of PC DRAM products are now carrying a relatively low level of inventory (i.e., around 4-5 weeks) and anticipating that DRAM prices will keep rising in the foreseeable future, they have been further ramping up their DRAM procurement activities. With regards to supply, the three dominant DRAM suppliers retain a conservative approach for raising bit output. The production capacity share of PC DRAM could experience a squeeze in the future because of robust demand in other application segments. For instance, some smartphone brands continue to vigorously stock up on memory components. Also, the demand for server DRAM products are expected to warm up rapidly in 2Q21. All in all, contract prices of PC DRAM products will register significant QoQ increases of 13-18% for 2Q21.

Server DRAM prices are projected to rise by nearly 20% QoQ due to cyclical upturn in server shipments

With regards to the demand for server DRAM, the second quarter is traditionally the peak season for server shipments while also being a fairly busy period within the year for the procurement of other kinds of DRAM products. Hence, the situation of different sources of demand competing for DRAM suppliers’ production capacity becomes more evident in this period. TrendForce expects server DRAM buyers to be more aggressive in inventory building during 2Q21 and begin to raise the procurement quantity on a monthly basis. This, in turn, will sustain the uptrend in server DRAM prices. With regards to supply, the server DRAM production capacities of the three dominant suppliers will still not return to the level that existed in the middle of 2020, although these suppliers will slightly increase the share of server DRAM in their overall DRAM production capacities in 2Q21. In addition to the peak-season effect, the COVID-19 pandemic continues to influence server manufacturers as well. Server manufacturers have intentionally extended their component inventories by several more weeks because of the pandemic-induced uncertainties. TrendForce is therefore not discounting the possibility of server DRAM contract prices registering a QoQ increase as large as around 20% for 2Q21.

Mobile DRAM contract prices are projected to remain bullish due to smartphone brands’ expanded procurement activities in advance of market risks

With regards to mobile DRAM demand, smartphone brands will not relax their inventory-building efforts in 2Q21 as the production capacity crunch in the foundry market has made them more vigilant in maintaining a stable component supply. The quarterly total smartphone production volume for 2Q21 is forecasted to exceed 300 million units. Although the three dominant DRAM suppliers have yet to adjust their product mixes for 2Q21, they will probably have to later on because the ASPs of server DRAM and other kinds of DRAM products are rising faster than the ASP of mobile DRAM. Hence, the production capacity share of mobile DRAM could be scaled back so that the production capacity share of server DRAM could grow. Additionally, the behavior of mobile DRAM buyers has been influenced by the cyclical upturn in prices and the anxiety over a tightening of supply in the future. They will continue to procure in large quantities so as to avoid the risks of a supply shortage and larger price hikes. This means that mobile DRAM prices will be on the uptrend as buyers stock up in advance.

Graphics DRAM contract prices are projected to rise by 10-15% QoQ due to high demand for graphics cards from cryptocurrency miners

With regards to demand, the three growth pillars of the graphics DRAM market are graphics cards, game consoles, and cryptocurrencies. At the same time, the mining of various cryptocurrencies has become a lucrative activity. Besides graphics cards that represent the more conventional mining technologies, miners are buying notebooks for this purpose as well. Sensing opportunities, Nvidia has launched CMP (cryptocurrency mining processor) cards and thereby taken up more of DRAM suppliers’ resources. This, in turn, has led to small- and medium-sized OEMs and ODMs experiencing a widening supply gap for graphics DRAM. With regards to supply, the three dominant DRAM suppliers have all reassigned their production capacity for graphics DRAM from GDDR5 to GDDR6, resulting in an increasingly lopsided discrepancy between the two products’ bit supplies, so there is no effective resolution to the ongoing shortage of GDDR5 products. As for GDDR6, demand remains strong as cryptocurrency mining is keeping the demand for graphics cards at a high level, although Nvidia is hogging much of the existing production capacity for graphics DRAM. Looking ahead to 2Q21, the supply situation will still be very strained unless the values of the mainstream cryptocurrencies undergo a drastic change. TrendForce forecasts that contract prices of graphics DRAM will rise by about 10-15% QoQ during this period.

Consumer DRAM contract prices are projected to rise by up to 20% QoQ due to intensifying shortage

With regards to consumer DRAM demand, the demand for TVs, set-top boxes, and networking devices remains strong due to the prevailing stay-at-home economy. Additionally, the build-out of 5G infrastructure and the rapid migration to Wi-Fi 6 contribute to the brisk demand for low-density consumer DRAM products. The supply gap in consumer DRAM market is already significant at this moment and will likely widen in 2Q21. With regards to supply, the overall production capacity for DDR3 products is gradually shrinking. The three dominant suppliers are migrating to the more advanced processes such as the 1Z-nm and 1-alpha nm while reassigning the wafer production capacity of the older processes such as the 20nm and 25nm to CMOS image sensors. Also, Taiwan-based suppliers have allocated some wafer production capacity to products with higher margins (e.g., logic ICs and Flash memory). As a result, the consumer DRAM market is in a rare situation of experiencing a supply shortage and a demand rebound at the same time. There is a strong likelihood that prices of some consumer DRAM chips will register a QoQ increase of almost 20% for 2Q21 contracts, and there is room for further hikes following quarterly contract negotiations.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

There are four major categories of automotive DRAM applications, including infotainment, ADAS, telematics, and D-clusters (digital instrument clusters), according to TrendForce’s latest investigations. Of the four categories, infotainment applications require the highest DRAM content, although DRAM consumption per vehicle across all four categories remains relatively low at the moment. In contrast to ADAS, infotainment applications present a lower barrier to entry for companies, since current legislations and automotive safety standards governing infotainment are not as stringent, making infotainment a highly attractive market for various semiconductor companies and memory suppliers. TrendForce expects infotainment to remain the primary driver of automotive DRAM consumption through 2024, while all four automotive DRAM applications will together likely comprise more than 3% of total DRAM consumption as autonomous driving technology progresses toward higher levels. As such, automotive DRAM applications represents an emerging sector whose potential for growth should not be underestimated.

TrendForce further indicates that the safety requirements of automotive parts are far higher than those of consumer electronics in terms of both quality and durability. As a result, the release of new vehicle models may take up to 3-5 years from development and verification to release. Vehicles still under development are therefore likely to greatly surpass existing models in terms of both memory content and specifications.

Infotainment will comprise the majority of automotive DRAM consumption, while total automotive DRAM consumption is still relatively low

Infotainment applications represent the highest bit consumption among the major automotive DRAM applications, due to the computing demand of basic media entertainment functionalities in vehicles now. However, most vehicles with these functionalities require only about 1-2GB (gigabytes) of DRAM, which is the current mainstream, since infotainment applications are still relatively basic. As infotainment systems evolve towards higher image qualities and higher video bitrates, solutions requiring 4GB in DRAM content are also under development, with high-end systems transitioning to 8GB in DRAM content. On the other hand, given the close viewing distance involved in automotive infotainment, video bitrates must be sufficiently high to minimize lag. DRAM specifications for infotainment applications are therefore gradually shifting from DDR3 2/4Gb (gigabits) to LPDDR4 8Gb in order to satisfy the high data transfer speed and bandwidth required to achieve a sufficiently high video bitrate and optimal viewing experience.

With regards to ADAS, development is currently divided into two architectures: centralized vs. decentralized (or distributed) systems. Decentralized systems include such devices as reverse parking sensors, which require about 2/4Gb of DRAM. Centralized systems, however, require 2/4GB of DRAM, since data collected from various sensors located throughout the vehicle are transferred to and computed in a central control unit in centralized ADAS. Most vehicles with autonomous driving capabilities currently available on the market are still equipped with ADAS levels 1-2 and therefore require relatively low DRAM content. Going forward, as the development of autonomous driving technologies moves to level 3 and beyond, along with the potential inclusion of AI functionalities, vehicles will need to be able to integrate and process enormous amounts of data collected from sensors in real-time, as well as perform immediate decision-making with the collected data. Given the high bandwidth required for such operations, there will be a corresponding increase in automotive demand for higher-spec DRAM as well, and automotive DRAM for ADAS applications is expected to transition from DDR3 to LPDDR4/4X and even LPDDR5 or GDDR5/HBM later on, though this transition will require more time before it can take place, due to existing regulations.

The mainstream memory products used for telematics, or automotive communication systems, are MCP (Multi Chip Package) solutions. Due to the frequency and compatibility requirements of baseband processors contained in these systems, all telematics applications require the use of LPDRAM. As V2V and V2X gradually become necessities in the auto industry, automakers will place a high importance on memory bandwidth, meaning automotive DRAM for telematics will gradually shift from mainstream LPDDR2 solutions to LPDDR4/LPDDR5. Even so, the growth of telematics will depend on the pace of global 5G infrastructure build-out, since telematics requires 5G networks for fast peer-to-peer connections. As for D-clusters, DRAM bit consumption per vehicle for this application category comes to either 2Gb or 4Gb, depending on the individual vehicle’s degree of digitization for its instrumental panel. However, DRAM consumption for D-clusters is not expected to undergo significant future growths, and D-clusters may potentially be merged with infotainment into a single centralized system going forward.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Demand for notebook computers is expected to remain strong throughout 2Q21 due to the persisting stay-at-home economy that arose in the wake of the pandemic, according to TrendForce’s latest investigations. In response to the high demand for notebooks, PC OEMs are actively raising a consistent inventory of components, including client SSDs. Nonetheless, client SSDs are now in increasingly tight supply because the preexisting shortage of NAND Flash controllers is now exacerbated by the power outage at Samsung’s Austin-based semiconductor plant. SSD manufacturers are therefore preparing to raise the prices of SSDs. Accordingly, TrendForce has also revised up its forecast of client SSD prices for 2Q21 from “mostly flat” to a 3-8% increase QoQ instead.

As previously mentioned, Samsung’s semiconductor plant in Austin, Texas (here referred as Samsung Austin) was affected operationally by a severe winter storm that blanketed the entire state last month. As a result, production activities at the plant were mostly suspended from mid-February to March 2. TrendForce’s investigation of this incident finds that the plant is starting to recover operationally. Even so, the capacity utilization rate of the whole plant is not expected to return to the level of above 90% until the end of March, and this delay has had a palpable impact on Samsung’s chip production. With regards to product mix, there is no wafer input for NAND Flash at Samsung Austin. Nevertheless, 10% of its production capacity is used to manufacture in-house controller ICs for Samsung’s own branded SSDs. TrendForce’s investigation also finds that most controller ICs made at Samsung Austin are for client SSDs shipped to PC OEMs. In particular, among Samsung’s client SSD offerings, products based on 128L NAND Flash are expected to be directly affected by the incident.

It should be pointed out that, after kicking off mass production of 128L client SSDs in 4Q20, Samsung originally planned to take advantage of the release of Intel’s Tiger Lake CPUs to expand Samsung’s market share of PCIe G4 SSDs through aggressive pricing. After all, its competitors have been slow in ramping up production of PCIe G4 SSDs due to the negative impact of the pandemic and due to the longer-than-expected qualification process from PC OEMs. In light of the shortage of controller ICs, however, all SSD manufacturers are now forced to extend the lead times for their SSD orders, making it difficult for any manufacturer to increase their supply of SSDs and compelling them to in turn raise 2Q21 prices of client SSDs.

On the other hand, the power outage has had an impact on enterprise SSD prices as well, since enterprise SSDs and client SSDs are highly correlated in terms of prices. Furthermore, clients in the data center segment are expected to ramp up their procurement activities for enterprise SSDs in 2Q21 after the previous bearish period, meaning there will likely be successive QoQ increases in the volume of enterprise SSD orders going forward. Enterprise SSD prices are therefore expected to enter an impending upturn, and TrendForce has in turn revised up its forecast of enterprise SSD prices for 2Q21 from a 0-5% decrease QoQ to a 0-5% increase QoQ instead.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

As the three dominant DRAM suppliers (Samsung, SK Hynix, and Micron) are currently experiencing a shortage in their production capacities, the corresponding shortage situation in the DRAM market has yet to be resolved, according to TrendForce’s latest investigations. Taking advantage of the fact that the whole DRAM market has entered a period of cyclical upturn in 1Q21, DRAM suppliers have significantly raised quotes for specialty DRAM products. This extraordinary development has led to price hikes that are almost double digits for some specialty DRAM chips. Furthermore, the magnitude of the price hike especially widens for products belonging to the lower part of the density range and the more niche applications. Looking at MoM changes in contract prices of specialty DRAM products for February, DDR2 and DDR3 chips saw the largest price hikes. Prices of DDR4 chips also went up due to the influence of the rising quotes for DDR3 chips. The average contract price of DDR3 4Gb chips, which are still mainstream for specialty applications, jumped 6.8% MoM.

As for DDR3 2Gb chips that are primarily promoted by Taiwan-based suppliers, TrendForce indicates that there is not enough supply even as quotes are being offered. With this situation becoming the norm, the price range (i.e., the difference between the high and low prices) has also expanded dramatically. The average contract price of DDR3 2Gb chips rose by nearly 9% MoM in February. Samsung significantly raised quotes for DDR4 4Gb chips in response to the sharp upswing in prices of DDR3 chips. The low and average prices of DDR4 4Gb chips for specialty applications both climbed around 6% MoM. The average price of DDR4 8Gb chips went up by around 4% MoM as the price trend of this product aligns with the general price trends of mainstream PC DRAM and server DRAM products. However, it should be pointed out that the hikes in contract prices of specialty DRAM chips were mainly the result of the adjustments made to monthly contract deals and thus reflected the market situation of February. By contrast, prices held steady for quarterly lock-in deals with tier-1 clients.

While the three dominant DRAM suppliers have been slowing down their DDR3 manufacturing, Taiwanese suppliers are constantly adjusting their capacity allocation to maximize profits

With demand getting hotter in the specialty DRAM market, DDR3 products are starting to surpass DDR4 products and logic ICs in profit margin. Consequently, DRAM suppliers are also changing their strategies. Looking at South Korean suppliers, Samsung will continue shifting the wafer production capacity of Line 13 to CMOS image sensors over the long term. However, this reassignment has now been scaled down for this year due to the recent surge in specialty DRAM prices. Likewise, SK Hynix will keep the DRAM production capacity of its older fab M10 relatively constant through 2021 after reducing it in 2020. As for Micron, it has raised the yield rates of the 1Z-nm and 1-alpha processes, so the output shares of products based on these more advanced technologies will gradually expand. Since the available fab space in Taiwan is limited, Micron will relocate the 20nm and more mature processes to Fab 6 in the US. In sum, the output of DDR3 products from the three dominant suppliers will continue to shrink, but the pace of the reduction is now slower than originally expected.

Regarding Taiwan-based suppliers, Nanya has shifted some 20nm and 30nm production capacity from DDR4 products back to DDR3 products. Winbond has been focusing on Flash products in the recent years, and its DRAM production capacity will remain fairly limited until the completion of its new fab in Kaohsiung. Nevertheless, Winbond is concentrating its DRAM production efforts on low-density DDR2 and DDR3 products (i.e., 1Gb and 2Gb chips). It actually has the advantage of being able to raise prices as its market share for low-density products is fairly large. As for PSMC, it has been focusing on foundry manufacturing of logic ICs for a while. However, with prices now rising for foundry manufacturing of DDR3 products, PSMC now wants to shift some wafer production capacity back to DRAM. Going forward, the three Taiwan-based suppliers will keep adjusting their capacity allocation strategies in accordance with changes in the profit margins of different products. Nevertheless, even as suppliers are now changing their product mixes to take advantage of the latest market situation, TrendForce projects that specialty DRAM products will be in undersupply at least through 1H21. The magnitudes of price hikes for various types of specialty DRAM products will depend on suppliers’ capacity allocation strategies.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Global DRAM revenue reached US$17.65 billion, a 1.1% increase YoY, in 4Q20, according to TrendForce’s latest investigations. For the most part, this growth took place because Chinese smartphone brands, including Oppo, Vivo, and Xiaomi, expanded their procurement activities for components in order to seize the market shares made available after Huawei was added to the Entity List by the U.S. Department of Commerce. These procurement activities in turn provided upward momentum for DRAM suppliers’ bit shipment. However, clients in the server segment were still in the middle of inventory adjustments during this period, thereby placing downward pressure on DRAM prices. As a result, revenues of most DRAM suppliers, except for Micron, remained somewhat unchanged in 4Q20 compared to 3Q20. Micron underwent a noticeable QoQ decline in 4Q20 (which Micron counts as its fiscal 1Q21), since Micron had fewer work weeks during this period compared to the previous quarter.

Demand for PC, mobile, graphics, and consumer DRAM remains stable throughout 1Q21. As for clients in the server segment, they have now reinitiated a new round of procurement for server DRAM after adjusting their inventories during the two previous quarters (3Q20 and 4Q20). These aforementioned factors, in addition to Micron’s power outage at the start of December last year, resulted in a price hike across all DRAM product categories in 1Q21. TrendForce expects DRAM bit supply to remain unchanged and prices to enter an upturn compared with 4Q20. However, as 1Q21 is the first quarter of the upturn in the DRAM market, and demand is yet to emerge out of the off-season, any growth in bit shipment and prices is expected to be modest, with only a slight QoQ increase in global DRAM revenue compared to 4Q20.

Suppliers’ profits were constrained by persistent declines in DRAM prices in 4Q20

With regards to revenue, the performances of Korean DRAM suppliers and that of Micron once again diverged from each other in 4Q20. This difference can mostly be attributed to the fact that, as previously mentioned, Micron had 13 work weeks in 4Q20 (which it refers to as its fiscal 1Q21) compared to the previous quarter, which contained 14 work weeks and therefore was a higher base for QoQ comparison. As such, Micron’s 4Q20 DRAM bit shipment and ASP both fell short of 3Q20 figures. Conversely, although Korean suppliers likewise experienced a QoQ decline in DRAM ASP, they were able to increase their bit shipment, indicating that their client demand was recovering during this period. Samsung and SK Hynix both increased their bit shipment by a wider margin than previously expected. This was enough to offset the downward pressure on revenue caused by the decline in the two companies’ DRAM quotes. In 4Q20, Samsung and SK Hynix each recorded a 3.1% and 5.6% QoQ increase in revenue, while Micron’s revenue declined by 7.2% due to the corresponding decline in its quarterly bit shipment. Micron’s market share also subsequently fell to 23% in 4Q20. Moving to 1Q21, however, Micron is likely to catch up to its Korean competitors in terms of market share, owing to Micron’s pricing strategies, which are the most aggressive among DRAM suppliers, as well as to a general upturn in DRAM quotes.

With regards to profits, all suppliers experienced a decline in 4Q20 as a result of the 5-10% QoQ decline in DRAM ASP. In particular, Samsung’s operating profit margin fell from 41% in 3Q20 to 36% in 4Q20, while SK Hynix likewise showed a decline from 29% in 3Q20 to 26% in 4Q20. For the September-November fiscal quarter (Micron’s own fiscal 1Q21), Micron posted a similar decline in DRAM ASP compared to that of its Korean competitors, as well as a decline in operating profit margin from 25% in 3Q20 to 21% in 4Q20. Taken as a whole, DRAM suppliers were unable to make up for the drop in DRAM quotes with cost-optimization measures. Looking ahead to 1Q21, on the other hand, TrendForce expects DRAM quotes to rebound from rock bottom, in turn generating some upward momentum for suppliers’ profitability to rebound from rock bottom as well. These events will officially mark the cyclical upturn in DRAM prices. It should also be pointed out that, for instance, leading supplier Samsung still retains at least a 30% profit margin even at the lowest level of quotes, while this figure is closer to 10% for Nanya Tech, which is comparatively smaller in scale as a company. These margins suggest that the DRAM industry will be able to maintain its profitability due to its oligopolistic nature, at least prior to the entrance of emergent suppliers from China.

With regards to Taiwanese suppliers, Nanya Tech also increased its bit shipment while its quotes fell compared to 3Q20, resulting in a slight QoQ decline of 0.7% in revenue in 4Q20. Along with falling quotes, Nanya Tech’s operating profit margins narrowed from 13.5% in 3Q20 to 8.8% in 4Q20. As for Winbond, NOR Flash products accounted for an increasing percentage of its total revenue, mostly at the expense of its NAND Flash business, in 4Q20. However, its DRAM revenue underwent a slight QoQ growth of 0.8% during this period due to an early upturn of the specialty DRAM market. This growth was relatively limited due to Winbond’s limited DRAM bit supply rather than low client demand. PSMC’s DRAM revenue includes only its in-house PC DRAM products. The company’s DRAM revenue declined by about 1.7% QoQ in 4Q20 because its production capacity for DRAM was crowded out by other logic ICs in relatively high demand, including PMICs (power management IC), driver ICs, and CIS.

TrendForce indicates that, going forward, the three Taiwanese suppliers are still placing a heavy emphasis on their strongest products while furthering their own respective competitive advantages in the industry. For instance, Nanya Tech has been actively developing its 1A/1Bnm process technologies, with the goal of submitting samples to its partners by the end of 2021. Winbond, on the other hand, is continuing to improve the yield rate of its new 25nm DRAM process technology and expand its production capacity to meet the high demand for NOR Flash memories. Finally, PSMC will continue to maintain fully loaded wafer capacity for logic ICs, which are products with relatively higher gross margins, given the high demand for such products at the moment.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com