The latest analysis by DRAMeXchange, a division of TrendForce, finds that the interference in pricing by the China’s National Development and Reform Commission in 1Q18 is still having an effect on the mobile DRAM market in 2Q18, causing the quoting to be more conservative. Quotes of mobile DRAM products have not gone up as much compared with quotes of DRAM products for other applications. For discrete mobile DRAM products, the QoQ increases in their quotes for 2Q18 were within 1% on average. The quotes of eMCP products actually fell by 1% QoQ on average due to the slide in NAND Flash prices.
With regard to 3Q18, DRAMeXchange forecasts that the total smartphone production volume will increase by 5-10% QoQ ahead of the traditional busy season. On the supply side, SK Hynix and Micron are expected to raise their wafer starts. This together with the overall advancement in technology migration and yield rate improvement may bring some ease to the strain in supply. DRAMeXchange thus anticipates that the overall trend of contract prices in 3Q18 will not deviate noticeably from 2Q18. Prices of discrete products are expected to be stable or go up a bit in 3Q18, while prices of eMCP products are expected to either stay constant or go down slightly
From the perspective of market demand, upstream memory suppliers are now keen on offering eMCP products that contain more NAND Flash at lower prices. This promotion is intended to spur the consumption of the overall NAND Flash capacity. Flagship smartphones that are being released in 1H18 from Chinese brands including Huawei, Xiaomi, OPPO and Vivo also reveal the push toward eMCP products with higher NAND Flash density. The majority of Chinese flagships to be released during this period are expected to carry 128GB+48Gb, an upgrade from the mainstream specification of 64GB+32Gb of last year’s flagships.
Although raising the NAND Flash density in eMCP products can significantly moderate the supply-driven price decline in the NAND Flash market caused by the expansion of 3D-NAND production, this action is also tightening the supply of mobile DRAM for eMCP. For instance, the average DRAM density of eMCP products for the majority of flagship smartphones has already increased from from last year’s 32Gb to current 48Gb. The promotion of eMCP products will therefore aggravate the undersupply of eMCP and discrete products that use LPDDR4X DRAM, as the share of smartphones carrying LPDDR4X components will increase in 2H18 from 1H18 after new iPhones and Android flagships are released. Moving forward, securing the supply of LPDDR4X components and negotiating their prices will be much more challenging.
DRAMeXchange notes that, although prices of DRAM products for PCs and servers continue to rise in the first half of 2018, large price fluctuations generally do not apply to mobile DRAM products, because they vary in density specifications and are limited in terms of compatibility with application processors that work either with only eMCP or with only discrete. The increasing cost pressure faced by smartphone vendors also needs to be considered. If the DRAM suppliers increase the contract prices, less smartphone vendors will be willing to increase the memory density of their models. Hence, both increase and decrease in prices of mobile DRAM products tend to be gradual rather than sharp.