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Persistently Strong Demand for Graphics Card to Drive up Graphics DRAM Prices in 4Q20, Says TrendForce

3 September 2020 Semiconductors Ray Hsieh

The global spread of the COVID-19 pandemic has resulted in WFH and distance education becoming the new tenets of everyday life, according to TrendForce’s latest investigations. The resultant booming stay-at-home economy has not only galvanized an explosive double-digit growth for NB (notebook computer) shipment this year, but also benefitted the graphics card market, whose remarkable shipment performance that began in 2Q20 is expected to persist in 2H20.

The highlights for the graphics card industry this year consist of NVIDIA’s recently announced Ampere cards and AMD’s Big Navi, which will be released in 4Q20. Graphics card manufacturers have obtained the new reference graphics cards from NVIDIA, and they are currently implementing verification and testing. If manufacturers can complete these processes and release the cards to the market on schedule, the positive outlook of the graphics card market will likely continue throughout 4Q20. In terms of graphics DRAM, the new cards are equipped with more content per box (DRAM capacity) compared with the previous generation. The simultaneous increase in shipment quantity and content per box will potentially stop the price drop for graphics DRAM ahead of other DRAM products.

GDDR5 prices may enter into an upswing against the overall decrease in DRAM prices in 4Q20, while the decline in GDDR6 prices is expected to narrow

Looking at the supply side of the graphics DRAM market, the three dominant suppliers Samsung, SK Hynix, and Micron are accelerating their efforts to shift production capacity from GDDR5 to GDDR6 this year. In addition, GDDR6 will account for more than 60% of total graphics DRAM bit output, officially surpassing GDDR5. Regarding the demand side, some of NVIDIA’s current-gen graphics cards based on the Turing architecture which are equipped with GDDR5 have occupied the majority of graphics card sales in the past two quarters. The lowered production capacity and high demand have thus resulted in a tight supply situation for GDDR5. On the other hand, spot prices of GDDR5 8Gb chips are 10% higher compared to 3Q20 contract prices. Therefore, the supply of GDDR5 is expected to remain tight throughout the transition period prior to the increased production and shipment of the new NVIDIA Ampere graphics cards, while GDDR5 contract prices are highly likely to enter an upsurge ahead of other DRAM products.

Demand is expected to take off for GDDR6 thanks to its deployment in the upcoming game consoles (i.e. Xbox Series X and PS5). Furthermore, GDDR6 has been adopted for new products across all price segments of the graphics card market. The demand for the next-generation series is going to keep rising as the current period of product transition is coming to an end. The supply of GDDR6 products is not as tight as before because DRAM suppliers are gradually reallocating their production capacity for graphics DRAM to GDDR6 products. In spot trading, the average transaction price of GDDR6 8Gb chips now stands around the same level as the average contract price of the same product for 3Q20. Due to the lack of a noticeable difference with spot prices, contract prices of GDDR6 products are projected to stabilize and will unlikely experience another double-digit QoQ decline in 4Q20.

It is worth pointing out that graphics DRAM constitutes a more demand-sensitive segment of the whole DRAM market. The price trend of graphics DRAM products can therefore deviate from the price trends of the other major categories of DRAM products because it fluctuates much more dramatically when demand changes. TrendForce also has to emphasize that graphics DRAM accounts for just 6% of the overall DRAM bit consumption. Moreover, the manufacturing of graphics DRAM products does not allow interchangeability of products on the frontend (or wafer) production process. In contrast, the frontend production process for commodity DRAM (including PC DRAM, server DRAM, and specialty/consumer DRAM) can produce different types of standard memory chips. Hence, shifts in the price trend of graphics DRAM products should not be regarded as an indicator of the state of the DRAM industry.

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