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The stay-at-home economy generated by the COVID-19 pandemic has galvanized a rising demand for IT products this year, with a corresponding increase in DDI demand as well, according to TrendForce’s latest investigations. More specifically, large-sized DDI demand is expected to increase by as much as 7.4% YoY in 2021, although the availability of 8-inch foundry capacity in the upstream supply chain is expected to increase by a mere 2.5% YoY due to other chips with relatively higher margins occupying much of this capacity. Foundries such as NexChip and SMIC are still continuing to install production capacities this year, and the supply of large-sized DDI will undergo a slight increase as a result. However, these newly installed capacities will be unable to fully alleviate the scarcity of large-sized DDI, which may potentially persist until the end of 2021.
While foundry capacities remained tight, prompting IC design companies to compete over limited foundry capacities in order to fulfill rising demand for various end devices, the top 10 IC designe (fabless) companies posted remarkable revenues in 1Q21, according to TrendForce’s latest investigations. In particular, thanks to the global mining craze brought about by the cryptocurrency market, Nvidia was able to surpass Broadcom in revenue and take the second spot among the top 10. On the other hand, fifth-ranked AMD scored a staggering YoY growth of 92.9%, which is the highest % increase on the top 10 list.
TrendForce’s latest investigations find considerable discrepancy between prices for graphics DRAM products in the contract market and in the spot market. Quotes for graphics DRAM products continue to rise in the contract market as the severe undersupply situation persists. Furthermore, the supply fulfillment rates for orders from some medium- and small-size clients have been hovering around 30%. This undersupply situation is expected to persist through 3Q21, during which graphics DRAM contract prices are expected to rise by 8-13% QoQ. Regarding the spot market, on the other hand, the value of ETH experienced continued uptrend from the start of 2021 until May, thereby driving up the demand for graphics cards, regardless of them belonging to the newer or older series. At the height of the graphics card boom, spot prices of graphics DRAM products were up to 200% higher than contract prices. Demand from miners for graphics cards are expected to be relatively muted before cryptocurrencies return to their previous bullish trends, and the gap between the spot and contract prices of graphics DRAM products will likely narrow in 3Q21 as a result.
Memory suppliers are currently carrying a relatively low level of inventory because of aggressive stock-up activities of clients across different application segments in 1H21, according to TrendForce’s latest investigations. More specifically, inventories of DRAM suppliers and NAND Flash suppliers are averaging 3-4 weeks and 4-5 weeks, respectively. The overall procurement of server memory products is expected to intensify in 3Q21, so memory suppliers do not see the necessity in lowering quotes to drive sales. TrendForce forecasts that DRAM prices will rise further by 3-8% QoQ for 3Q21. On the other hand, thanks to the growing demand for enterprise SSDs and NAND Flash wafers, TrendForce has also corrected up the magnitude of the QoQ increase in NAND Flash prices for 3Q21 to 5-10% (compared with the previous projection of 3-8%).
Enterprise SSD procurement has been rising on the back of growing server shipments since 2Q21, according to TrendForce’s latest investigations. In particular, the share of 8TB products in shipments of SSDs to data centers has shown the most noticeable growth, which is expected to persist through 3Q21. However, certain SSD components and parts may be in shortage due to insufficient foundry capacity. TrendForce is therefore revising the QoQ hikes in contract prices of enterprise SSDs for 3Q21 to 10-15% from the previous projection of 5-10%.
