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TrendForce: DRAM Industry Outlook Positive for 2014, Annual Sales Growth Likely to Exceed 10%

5 December 2013 Semiconductors Ken Kuo

According to DRAMeXchange, a research division of TrendForce, 2013 has been a critical year for the DRAM industry. Benefiting from the rising smartphone and tablet sales, the first tier DRAM manufacturers gradually shifted their attention to Mobile DRAM, a move which caused the eventual decline in PC DRAM production; In the periods following the fire accident at SK Hynix's Wuxi plant, 4GB module contract prices rose from US$17 to US$33, and gave DRAM manufacturers greater room for profit. In the periods ahead, both the structural changes within the industry and the market's newly formed oligopoly are anticipated to pave the way for new opportunities. TrendForce expects the DRAM industry to show the following five trends in 2014:

1、2014 DRAM Revenues to Rise by 12%, Show Growth for Second Consecutive Year since Financial Crisis

Due to the transformation of the DRAM industry into an oligopoly, the exit of Taiwanese DRAM manufacturers, and the effects of SK Hynix's fire accident in 2H13, DRAM revenue is estimated to grow by 32.5% YoY to US$35.2 billion in 2013. Looking at 2014, as the difficulties associated with the 20nm migration process increases, the industry bit supply growth is expected to slow down. ASP, meanwhile, is anticipated to decline on a gradual basis as manufacturing costs improve. With DRAM manufacturers not actively seeking to migrate to new manufacturing technologies and the focal point of their strategies shifting to making product mixes more adjustable, TrendForce believes next year's DRAM market value will rise by 12% YoY to US$ 39.5 billion. This is expected to be the year during which DRAM manufacturers show the most disciplined behavior on the production end since the financial turmoil in 2009.

2、Industry to Become More Profitability Stable in 2014 following Micron's Official Acquisition of Elpida and Market’s Transformation into Oligopoly 

After officially acquiring Elpida in August 2013, the scale of the new Micron group's revenue has reached close to that of SK Hynix. Together, SK Hynix, Samsung and Micron account for roughly 90% market share of the DRAM industry, a sign that the market has officially become an oligopoly. As each of the three major DRAM manufacturers in the industry possesses its own NAND Flash manufacturing technology and has flexible room for adjusting product mix, the DRAM market’s price movements are expected to remain stable, and the profitability trend is anticipated to continue into 2014. 

3、Mobile DRAM to Officially Become Mainstream as Proportion of PC DRAM Declines

Due in part to the rising sales of smartphones and tablets, an increasing number of DRAM manufacturers have entered the Mobile DRAM market and are gradually decreasing the amount of PC DRAM produced. In 2014, TrendForce projects Mobile DRAM will account for nearly 36% of the DRAM market in the output bases and become the new mainstream product, whereas PC DRAM’s market share is only expected to be 30%. Looking at the specific Mobile DRAM product lines, the proportion of LPDDR3 is currently expected to grow at a more rapid pace in the smartphones and tablets adoption. In addition to the said mobile devices, LPDDR3 is expected to also exert considerable impact on the Ultralike market thanks to its ability to save more power than traditional DDR3 and allow for longer hardware operating times. Taking into account the overall momentum on the demand side, TrendForce believes the supplies of LPDDR3 will officially surpass that of LPDDR2 in 2H14 as it becomes a mainstream product within the industry.

4、Use of 2Xnm Manufacturing Process to Rise in 2014, Design Difficulties to Affect Migration Progress

In 2H13, DRAM manufacturers have encountered various difficulties while trying to migrate to 2Xnm technology. Given the physical limitations, even companies such as Samsung and SK Hynix are having problems improving their production yield rate and volumes. As the purchase of EUV equipments would be necessary for implementing the 25nm-and-under processes, the amount of financial resources spent will be noticeably greater than when the immersion scanners were used. Due to the aforementioned limitations, mass production is unlikely to be achieved with the latest EUV developments, and the exact schedules for when DRAM manufacturers will transition to the below 25nm process remain uncertain. TrendForce estimates that the DRAM manufacturers will still mainly use 2Xnm technology in 2014, but believes that the migration progress could be halted by design-related obstacles.

5、DDR4 to be Introduced in 2H14 and Used in Server DRAM First

As the dynamics on the demand side changes and the numbers of portable devices increase, the boundaries among memory components have become increasingly less clear compared to the previous months. Mobile DRAM is now being used in the Notebook market, for instance, whereas low cost tablet manufacturers are beginning to contemplate using PC DRAM due to cost considerations. For Server DRAM, an increasing amount of emphasis is placed on not just retaining stability, but also maintaining speed and low power consumption. According to the specs released from JEDEC, the voltage of DDR4 will likely only be 1.2V, while its speed could reach up to as high as 3200 Mhz. First tier DRAM manufacturers are expected to begin mass producing DDR4 in 2014, but will only apply the component to Server DRAM in the initial stages. The product is expected to be introduced to the PC market in the later periods, and may replace DDR3 as the market mainstream in 2015.   


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