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TrendForce:2HApr. Contract Price Rises as PC OEMs Build Up Inventory

8 May 2013 Semiconductors

According to DRAMeXchange, a division of global research firm TrendForce, as memory suppliers continue reallocating capacity away from commodity DRAM production, future output is uncertain and buyers are building up inventory levels in the traditionally weak second season to avoid potential supply shortages. As a result, mainstream DDR3 4GB price reached a high of US$27, a 13% monthly increase and an over 70% increase since DRAM prices began rising five months ago. Average 4GB price hit US$26.5, and transaction volume was impressive, a sign that the uptrend is likely to continue in the short term. 2GB modules sold similarly well, especially due to the fact that 2Gb chip output has been gradually decreasing. 2GB price increased 9% over last month, arriving at US$15.5. As the rise of commodity DRAM prices will benefit mobile and server DRAM prices, the highest ASP growth in the DRAM industry in 2013 may occur in the second quarter.

Looking at demand, as the PC market remains affected by seasonality in the second quarter, Intel’s next-gen chipset Haswell is scheduled to arrive in June. However, based on manufacturers’ shipment estimates, the new platform is not expected to stimulate sales much. TrendForce forecasts notebook shipments will only experience 4.1% growth in the second quarter, far less than the 10% increase seen in previous years. Although the commodity DRAM price uptrend is expected to continue, the underlying cause has more to do with PC OEMs’ inventory strategies than stimulation from market demand. Thus, the commodity DRAM price trend in the second half of the year is unpredictable; market supply and demand is balanced at the moment, but any changes in the market could throw off price trends.

Global Mobile DRAM Output Exceeds Commodity Production for First Time in Second Quarter

With the continued popularity of smartphones and tablets, DRAM makers worldwide have all upped their mobile memory production. Mobile DRAM output exceeded that of commodity DRAM in the second quarter, and is expected to see a nearly 80% yearly increase in 2013. Currently, mobile DRAM accounts for 32% of the memory market and is forecast to take 35% on production output base by the end of the year, becoming the leading memory category. As for commodity DRAM, although prices have doubled since last year’s low, with DDR3 2Gb arriving at US$1.5, commodity products are still less profitable than mobile DRAM. Thus, top suppliers will continue cutting back on commodity memory in favor of mobile products.

While all DRAM makers are focusing on mobile DRAM production, the Korean suppliers have been the most aggressive in the transition to mobile products. As Samsung’s Galaxy products sees strong sales across the globe, the maker’s mobile DRAM output accounts for more than 40% of total production. With the development of 20nm process technology, cost structure will likely decrease. SK Hynix is not far behind; as Apple as removed Samsung from its supply chain and may release more than one new mobile product this year, SK Hynix has been increasing mobile DRAM output in the second quarter in preparation for increased demand. As for Elpida, as a result of its strong relationship with Apple, the supplier’s mobile memory output is nearing 60%; the manufacturer will focus on increasing LPDDR3 production in the second half of the year. After the merger with Micron is complete, mobile DRAM production will remain at Elpida’s Hiroshima fab and Rexchip; research and development may be managed by Elpida as well. Paired with Micron’s NAND flash technology, the team will be able to produce eMCP products that will help increase mobile memory market share. Looking at market demand, smartphone and tablet shipments are expected to see over 30% growth this year. Additionally, Intel’s new Haswell chipset will support LPDDR3, providing new demand for mobile DRAM. By 2014, mobile memory products may account for more than 40% of the DRAM market.


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