While the server industry transitions to the latest generation of processors based on the x86 platform, the Intel Ice Lake and AMD Milan CPUs entered mass production earlier this year and were shipped to certain customers, such as North American CSPs and telecommunication companies, at a low volume in 1Q21, according to TrendForce’s latest investigations. These processors are expected to begin seeing widespread adoption in the server market in 3Q21. TrendForce believes that Ice Lake represents a step-up in computing performance from the previous generation due to its higher scalability and support for more memory channels. On the other hand, the new normal that emerged in the post-pandemic era is expected to drive clients in the server sector to partially migrate to the Ice Lake platform, whose share in the server market is expected to surpass 30% in 4Q21.
Suppliers and clients in the server DRAM market are still having difficulty in reaching agreements on prices for 3Q21 contracts even though the quarter is well underway, according to TrendForce’s latest investigations. Hence, server DRAM contract prices are much more varied than before. Regarding the price trend in July, contract quotes for the mainstream 32GB RDIMMs rose by 5-7% MoM. However, the price hikes have led to a reduction in demand, and there are indications that server DRAM sales bits will register some decline for 3Q21. The release of server CPUs based on the new platforms is driving the procurement of higher-density 64GB RDIMMs, but this has not resulted in a significant corresponding increase in content per unit. The general trend for buyers is to replace two 32GB modules with one 64GB module, rather than a one-to-one replacement as DRAM suppliers previously expected. Contract prices of 64GB RDIMMs rose by 5-7% MoM for July, though prices were below this range for some transactions.
Now that most negotiations over contract prices of PC DRAM for 3Q21 have concluded, DRAM suppliers’ low inventories and the arrival of the peak season for DRAM procurement have resulted in a 3-8% QoQ increase in PC DRAM contract prices for 3Q21, although this is a relatively muted growth compared to the 25% increase experienced in 2Q21, according to TrendForce’s latest investigations. However, demand for PC DRAM in the spot market began to show signs of bearish movement in early July ahead of time, as DRAM suppliers continued to lower prices in order to adjust their DRAM inventories. Regarding the contract market, PC OEMs currently carry relatively high levels of DRAM inventory because they substantially stocked up on PC DRAM beforehand in anticipation of an upcoming shortage. Not only has PC OEMs’ high DRAM inventory put downward pressure on possible price hikes for PC DRAM, but the gradual lifting of COVID-related restrictions in Europe and the US will also likely lower the overall demand for notebook computers, thereby pulling down the overall demand for PC DRAM. TrendForce therefore forecasts a 0-5% QoQ decline in PC DRAM contract prices for 4Q21.
After Malaysia extended its MCO (movement control order) 3.0, the Filipino government also announced the implementation of ECQ (enhanced community quarantine) measures in Metro Manila until August 20 in response to the Delta variant’s rapid spread in Southeast Asia that began in July. According to the August edition of TrendForce’s MLCC Market Bulletin, Japanese MLCC supplier Murata operates a manufacturing facility in Tanauan City, primarily for large-sized automotive MLCC (0.06 x 0.03 inches to 0.12 x 0.06 inches) production. This facility manufactures capacitors that meet the auto industry’s requirements of high capacitance, high voltage, and high temperature tolerance, and its monthly automotive MLCC production capacity accounts for about 18% of the industry total. As demand from the automotive market increases, Murata’s Tanauan-based facility is expected to maintain a high capacity utilization rate going forward. Samsung likewise operates an MLCC manufacturing facility in the Philippines, albeit in Calamba City. While the Calamba facility is primarily responsible for manufacturing normal MLCC (which are low-end and mid-range MLCC with standardized size/specs), its monthly normal MLCC production capacity accounts for 15% of the industry total and is second only to Samsung’s Tianjin-based facility. As well, the Calamba facility operates at a capacity utilization rate of more than 90%.
The stay-at-home economy remains robust due to the ongoing COVID-19 pandemic, so the sales of gaming products such as game consoles and the demand for related components are being kept at a decent level, according to TrendForce’s latest investigations. However, the values of cryptocurrencies have plummeted in the past two months because of active interventions from many governments, with the graphics DRAM market entering into a bearish turn in 3Q21 as a result. While graphics DRAM prices in the spot market will likely show the most severe fluctuations, contract prices of graphics DRAM are expected to increase by 10-15% QoQ in 3Q21 since DRAM suppliers still prioritize the production of server DRAM over other product categories, and the vast majority of graphics DRAM supply is still cornered by major purchasers.