The global DRAM revenue fell by 7.5% QoQ in 1Q15, with revenue totaling $12 billion, according to DRAMeXchange, a division of TrendForce. The decline in the industry’s revenue is the result of the 11% quarterly decrease of the average DRAM contract price and the seasonality effects in the notebook and smartphone markets.
Ken Kuo, assistant vice president of DRAMeXchange, said though DRAM makers experienced seasonal revenue decline in Q1, their margins did not shrink significantly as they made advances in process technology migration. This quarter’s margins were therefore roughly the same as its previous quarter’s. However, the effects of weak demand will have on DRAM price trend raises some concerns. How well the DRAM makers have done on technology migration and adjusting product mixes will be critical for their successful performances this year. DRAMeXchange forecasts the DRAM industry will be worth US$51.2 billion in 2015, an increase of nearly 12% YoY.
Looking at the Q1 market shares of DRAM brands, Samsung and SK Hynix respectively took 43% and 27% of the market, giving the combined Korean suppliers over 70% of the global DRAM market. The market share of the U.S.-based DRAM maker Micron was 22.5%, a slight decline compared with the previous quarter. These figures are unlikely to change much under the current oligopoly structure unless there are new market entrants (for example, China manages to create new rivals with its aggressive semiconductor policy).
As for manufacturing technology, Samsung remains the industry leader as its 20nm yield is stable and expected to account for nearly 60% of the supplier’s total output by the end of the year. SK Hynix’s performance is boosted by its 25nm process. The cost reduction that came with the technology migration offset the effects of declining prices, thus giving SK Hynix a healthy profit for this quarter. Micron’s Q1 revenue suffered a big 13% quarterly drop. Micron’s migration to the 20nm process has not progressed as expected, and a significant portion of the DRAM maker’s output still comes from the 30nm process. Micron will need to speed up the transition to the 20nm process as to prevent declining market prices from affecting its profits any further, according to Kuo.
With regard to Taiwan-based memory suppliers, Nanya is making a rapid migration from the conventional 30nm process to the 30nm-shrink process, which is expected to account for 50% of the total production by the end of the year. Nanya’s revenue will stabilize as the manufacturing costs are reduced. On the migration to 20nm, Nanya has scheduled next year for mass production. Affected by weak commodity DRAM prices, Powerchip’s Q1 revenue fell by 7.9% QoQ. However, Powerchip has already begun trial production on the 25nm process, and mass production will begin at the end of the year at the earliest. Winbond has no commodity DRAM output, focusing instead on specialty and mobile DRAM. With capacity fully loaded at 44K wafers per month, Winbond’s Q1 revenue only decreased by 1.3% QoQ.