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Press Releases
Server DRAM Contract Prices Projected to Rise by 10-15% QoQ in 2Q21 Owing to Limited Production Capacities, Says TrendForce

2021/02/25

Semiconductors

Since 3Q20, memory suppliers’ production capacities allocated to server DRAM have dropped to about 30% of the total DRAM production capacity, according to TrendForce’s latest investigations While this decrease took place as suppliers sought to increase the supply of other DRAM products in higher demand, it also represented an attempt for them to adjust the ASP of various DRAM products Furthermore, since the persistent demand for consumer electronics has shown no signs of slowing down in 1Q21, as of now suppliers have also been maintaining the same capacity allocation as last year However, given that second quarters have traditionally marked the cyclical upturn in server shipment, server DRAM demand is thus expected to ramp up in 2Q21, in turn prompting suppliers to raise their quotes for server DRAM TrendForce is therefore revising up the QoQ increase in server DRAM contract prices for 2Q21 from the original forecast of 8-13% to the adjusted forecast of 10-15%, with certain transactions potentially involving as much as a 20% price hike Server DRAM contract prices are likely to increase by more than 40% throughout the year as demand is likely to persist through 3Q21 With regards to demand, after DRAM prices reached rock bottom at the end of last year, the oversupply situation in the market and the pressure on buyers to destock their inventory have both gradually stabilized by now As prices closed in on historically low levels, buyers became more and more active in their procurement activities In addition, data center demand for server DRAM is set to increase after 1Q21, driven by the increasing cloud migration needs of the post-pandemic “new normal” This demand will likely persist through 2H21, thereby injecting additional growth momentum into the overall server market With regards to supply, on the other hand, DRAM suppliers will be relatively conservative in their capacity expansion efforts this year, with most suppliers having no plans to expand their capacities Also, the oligopolistic nature of the DRAM industry means suppliers generally prioritize profitability over other factors when allocating their production capacities Case in point, the rising popularity of WFH and distance education led suppliers to reallocate their production capacities last year More specifically, suppliers allocated their capacities to first fulfill the high demand from the smartphone and notebook computer markets in 3Q20 As a result, capacities allocated to server DRAM underwent a corresponding decline during this period On the whole, TrendForce expects server DRAM contract prices to increase by about 8% QoQ in 1Q21 and by 3-4% MoM on average within the quarter Moreover, TrendForce also does not rule out the possibility that server DRAM contract prices may experience additional slight MoM increases past this period given that contract prices are negotiated on a quarterly basis Looking ahead, TrendForce indicates that server DRAM will remain in high demand through 3Q21, as geopolitical uncertainties and the shift of work life towards WFH continue to generate upward momentum for server shipment Therefore, server DRAM contract prices are expected to rise by more than 40% cumulatively from late 2020 to late 2021 For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom

Press Releases
Revenue of Top 10 Foundries Expected to Increase by 20% YoY in 1Q21 in Light of Fully Loaded Capacities, Says TrendForce

2021/02/24

Semiconductors

Demand in the global foundry market remains strong in 1Q21, according to TrendForce’s latest investigations As various end-products continue to generate high demand for chips, clients of foundries in turn stepped up their procurement activities, which subsequently led to a persistent shortage of production capacities across the foundry industry TrendForce therefore expects foundries to continue posting strong financial performances in 1Q21, with a 20% YoY growth in the combined revenues of the top 10 foundries, while TSMC, Samsung, and UMC rank as the top three in terms of market share However, the future reallocation of foundry capacities still remains to be seen, since the industry-wide effort to accelerate the production of automotive chips may indirectly impair the production and lead times of chips for consumer electronics and industrial applications TSMC has been maintaining a steady volume of wafer inputs at its 5nm node, and these wafer inputs are projected to account for 20% of the company’s revenue On the other hand, owing to chip orders from AMD, Nvidia, Qualcomm, and MediaTek, demand for TSMC’s 7nm node is likewise strong and likely to account for 30% of TSMC’s revenue, a slight increase from the previous quarter On the whole, TSMC’s revenue is expected to undergo a 25% increase YoY in 1Q21 and set a new high on the back of surging demand for 5G, HPC, and automotive applications In response to increased client demand for 5G chips, CIS, driver ICs, and HPC chips, Samsung will continue to raise its semiconductor CAPEX this year, which is divided between its memory and foundry businesses and represents Samsung’s desire to catch up to TSMC With regards to process technologies, the Korean company’s capacity utilization rates for the 5nm and 7nm nodes have been relatively high in 1Q21, during which Samsung is expected to increase its revenue by 11% YoY In addition to chip demand from the automotive sector, UMC has been keeping up with manufacturing driver ICs, PMICs, RF front-end, and IoT products The company’s capacity thus remains fully loaded in 1Q21, and UMC is expected to undergo a 14% YoY increase in revenue GlobalFoundries is similarly experiencing high capacity utilization rates due to the increase in automotive chip demand, as well as the military chips that it has been manufacturing for the US Department of Defense GlobalFoundries’ revenue is expected to increase by 8% YoY in 1Q21 SMIC’s revenue for the 14nm and below nodes is expected to decline in 1Q21 as the company was added to the Entity List by the US and subsequently faced constraints in the development of advanced processes However, with the persistent demand in the foundry market for mature processes above (including) the 40nm node, SMIC’s revenue is projected to stay on a positive trajectory and reach a 17% YoY increase in 1Q21 TowerJazz will spend about US$150 million on a small-scale capacity expansion, but equipment move-in and calibrations will not be finalized until approximately 2H21, after which the expanded capacity will start measurably contributing to the company’s revenue In 1Q21, TowerJazz’s revenue is expected to be on par with the previous quarter while reaching a 15% increase YoY PSMC is primarily focused on manufacturing memory products, DDICs, CIS, and PMICs At the moment, high demand for 8-inch and 12-inch wafer capacities and for automotive chips has resulted in fully loaded capacity for PSMC The company’s revenue is expected to increase by 20% YoY in 1Q21 Likewise, VIS’ capacity is fully loaded across all of its process technologies Driven by increased spec requirements for PMICs and small-sized DDICs, VIS’ revenue is expected to increase by 26% YoY in 1Q21 Finally, Hua Hong is currently placing considerable emphasis on expanding the 12-inch capacity of HH Fab7 in Wuxi Process technologies for 12-inch production lines, including NOR, BCD, Super Junction, and IGBT, have all passed qualifications, thereby injecting fresh momentum into Hua Hong’s development Furthermore, given Hua Hong’s fully loaded 8-inch capacities and the fact that its performance in 1Q20 represents a relatively low base period for YoY comparison, Hua Hong’s revenue may likely reach a 42% YoY increase in 1Q21 For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom

Press Releases
Explosive Growth in Automotive DRAM Demand Projected to Surpass 30% CAGR in Next Three Years, Says TrendForce

2021/02/23

Semiconductors

Driven by such factors as the continued development of autonomous driving technologies and the build-out of 5G infrastructure, the demand for automotive memories will undergo a rapid growth going forward, according to TrendForce’s latest investigations Take Tesla, which is the automotive industry leader in the application of autonomous vehicle technologies, as an example Tesla has adopted GDDR5 DRAM products from the Model S and X onward because it has also adopted Nvidia’s solutions for CPU and GPU The GDDR5 series had the highest bandwidth at the time to complement these processors The DRAM content has therefore reached at least 8GB for vehicles across all model series under Tesla The Model 3 is further equipped with 14GB of DRAM, and the next-generation of Tesla vehicles will have 20GB If content per box is used as a reference for comparison, then Tesla far surpasses manufacturers of PCs and smartphones in DRAM consumption TrendForce forecasts that the average DRAM content of cars will continue to grow in the next three years, with a CAGR of more than 30% for the period Based on the existing vehicle models circulating in the global car market, TrendForce estimates that the average DRAM content of cars will reach around 4GB in 2021 The growth in the average DRAM content of cars is expected to be much higher this year than in the past few years However, car sales are not as great in scale when compared with sales of consumer electronics such as notebook (laptop) computers and smartphones In 2019 before the COVID-19 pandemic, the annual global car sales totaled around 94 million vehicle units Also, cars have less DRAM content compared with servers Looking at the 2019 data, the distribution of the annual global DRAM consumption shows that the automotive memory segment accounted for less than 2% of the total Despite high barrier to entry, memory suppliers have been scrambling for automotive market share due to high profit margins Compared with other application segments, automotive memory has a much higher standard for durability and reliability over the long term The operating lifecycle of a car starts at 10 years, so DRAM suppliers basically have to guarantee that their automotive memory solutions have a product lifecycle of at least 7-10 years in order to satisfy the needs related to vehicle maintenance and replacements of parts From the perspective of suppliers, the selection of process technology for product development and manufacturing is a key decision point when it comes to formulating a strategy for the automotive memory segment Even as suppliers continuously migrate to the more advanced process technology, they have to ensure product longevity and long-term support for their automotive offerings Another issue, which is associated with durability, is operating temperature Given that countries around the world have their own climates and extreme weather events, automotive DRAM products must have a much wider temperature range with a higher threshold and a lower threshold when compared with other categories of DRAM products, in order to ensure that cars do not break down on the road Finally, with density and other specifications being the same, prices of automotive DRAM products are at least 30% higher than prices of conventional commercial DRAM products For the automotive DRAM products that have met some of the most stringent standards set by the industry, their prices can even be several times higher than prices of conventional commercial DRAM products In sum, although automotive DRAM products are more difficult and costly to manufacture than other kinds of DRAM products, their high profit margins and large potential market have been attracting DRAM suppliers to now scramble for a piece of the automotive memory segment Taiwanese manufacturers show great potential as Winbond thrives in automotive OEM market with its comprehensive product portfolio Currently, Micron is the leader in automotive memory products with a market share of nearly 50% The supplier first has the geographical advantage Moreover, its collaborative relationships with tier-1 automotive suppliers based in Europe and the US are longer in duration compared with its competitors Micron also has a more comprehensive product lineup for automotive applications, ranging from traditional solutions (eg, DDR2 to DDR4) to LPDDR solutions (eg, LPDDR2 to LPDDR5) to GDDR6 solutions Additionally, Micron provides automakers with other types of memory technologies such as NAND Flash, NOR Flash, and MCP Apart from the three dominant DRAM manufacturers, Taiwan-based Nanya Tech and Winbond are continuing to release a wide variety of memory products in response to the growing demand of the automotive industry In addition to possessing a comprehensive product mix ranging from traditional DDR solutions (eg, up to DDR4) to low-power solutions (eg, LPSDR to LPDDR4X), Nanya Tech has also adopted the 20nm node for a significant portion of its manufacturing processes, which are relatively stable in terms of yield rate On the whole, automotive applications account for nearly 15% of Nanya Tech’s specialty DRAM revenue, while specialty DRAMs account for more than 60% of the company’s total revenue Winbond, on the other hand, has been cultivating its presence in the automotive market for more than 10 years Although the three dominant DRAM manufacturers are ahead of Winbond in terms of process technologies, Winbond’s extensive product portfolio, which includes specialty DRAM, mobile DRAM, NOR Flash, SLC NAND, and MCP, represents a competitive advantage over the vast majority of other manufacturers Given that the automotive OEM market is both relatively stable and profitable, Winbond has been placing a long-term focus on this market; automotive applications now comprise more than 10% of the company’s total memory revenue, and Winbond’s automotive business will likely continue to expand going forward For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom

Press Releases
Blackouts Affecting Samsung’s Texas-Based Line S2 Fab Expected to Impair 1-2% of Global 12-Inch Wafer Foundry Capacity, Says TrendForce

2021/02/19

Semiconductors

In compliance with the local policy, Samsung’s Austin-based foundry Line S2 partially suspended operation on Tuesday, Feb 16 due to the winter storm affecting Texas According to TrendForce’s investigation of the event, as the city’s public utility Austin Energy was able to warn of an impending power blackout ahead of time, the partial shutdown of the plant was not accidental but planned in advance TrendForce’s data show that the monthly 12-inch capacity of Line S2 accounts for nearly 5% of the global total While the winter storm is estimated to impair about 1-2% of the global 12-inch wafer foundry capacity, the actual duration of the impact will still depend on the region’s temperature Assuming that Austin will gradually warm up on Friday, Feb 19, and a phased restoration of power will take place at the fab, TrendForce now expects Line S2 to return to full operation after at least one week TrendForce indicates that the main process technologies of the fab are the 14nm and 11nm nodes These technologies are mainly used to manufacture Qualcomm’s 5G RFICs The fab’s other production capacity is distributed among production lines that feature nodes ranging from 65nm to 28nm and mainly manufacture products under Samsung System LSI Additionally, the fab manufactures automotive chips for Tesla and Renesas Although Samsung had implemented corresponding measures in advance of the blackout, with no silicon wafers reported to be damaged and a mere slight extension in lead times for certain products, Line S2’s increased lead times are still expected to exacerbate the strained semiconductor market in light of the industry’s shortage of production capacities for various semiconductor applications, including automotive products, which remain in extremely high demand Despite the blackout’s limited impact on NAND Flash controller manufacturing, urgent orders from SSD purchasers may result in a potential price hike It should be pointed out that, although Line S2 has stopped manufacturing NAND Flash, Samsung LSI still manufactures 14-40nm NAND Flash/SSD controllers at the fab Given that the volume of wafer starts for controllers at Line S2 is relatively low, and Samsung had already made emergency response preparations ahead of time, the blackout is expected to result in only a slight extension of lead times, without significant impact on the overall controller output However, as PC OEMs and CSPs are now starting to negotiate for the procurement of SSDs, major SSD suppliers have taken the strained supply of controller ICs into account when quoting SSD prices As such, despite the blackout’s relatively low impact on NAND Flash/SSD controller manufacturing, SSD purchasers, including the aforementioned PC OEMs and CSPs, may potentially accept a price hike during the negotiation process due to their urgency in procuring additional SSDs With regards to 2Q21 prices, TrendForce is currently adhering to the previous forecast of “mostly flat” for client SSDs and “slight decline” for enterprise SSDs, but TrendForce does not rule out the possibility that overall SSD prices may move in a positive trajectory once some purchasers accept a price hike For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom

Press Releases
NAND Flash Wafer Prices Stabilize Due to High SSD Demand from PC OEMs, Says TrendForce

2021/02/05

Semiconductors

NAND Flash demand continues to rise as strong sales of notebook (laptop) computers spur PC OEMs to place additional orders for client SSDs, according to TrendForce’s latest investigations Also, the supply-side inventory for NAND Flash memory has already fallen considerably due to the aggressive stock-up activities of some smartphone brands With customers in the data center segment expected to ramp up procurement in 2Q21, NAND Flash suppliers have decided to scale back the supply of NAND Flash wafers Compared with other product categories, wafers have a lower gross margin As a result of these factors, the decline in contract prices of wafers has been easing over the past two months (ie, from December of last year to January of this year) TrendForce indicates that the migration to the 1XX-L processes has not been proceeding as smoothly and rapidly as expected for notebook SSDs during 1Q21 The testing and approval of 1XX-L products by PC OEMs has actually fallen behind schedule, so the bulk of demand is staying with the 92/96L processes rather than shifting toward the more advanced stacking processes At the same time, customers in other application segments are still focusing their demand on the 92/96L processes as well as the 64L processes Consequently, the NAND Flash market is now seeing a general tightening of supply Wafers are the first to be affected by this turn of events since this product category is low on priority for suppliers As suppliers curb the quantity of wafers in order to meet the growing demand from other applications, contract prices of wafers are starting to display a more stable trend In fact, some suppliers are raising quotes for wafers this February Based on this latest development, TrendForce has revised its projection of wafer prices for 1Q21 The previous projection predicted a QoQ decline of 10-15%, whereas the latest projection indicates that prices will hold relatively steady from 4Q20 Looking ahead to 2Q21, customers in the data center and server segments are expected to generate a stronger procurement momentum NAND Flash suppliers will therefore concentrate on meeting the demand for enterprise SSDs and pay less attention to the wafer segment However, the volume of orders from module houses will be somewhat muted due to the influence of the ongoing shortage and price hike for NAND Flash controller ICs As both supply and demand become weakened, NAND Flash wafer prices are thereby expected to remain mostly flat for 2Q21 ICs in the upstream supply chain, however, remain in severe shortage As such, even though NAND Flash suppliers have been putting forth a full effort to fulfill the demand for client SSDs, they will still have to beware of the possibility that actual notebook shipment may fall short of expectations due to an uneven distribution in the supply of raw materials Furthermore, should the pandemic become gradually alleviated in 2H21, the global notebook demand may begin approaching pre-pandemic levels, in turn leading PC OEMs to revise their business plans accordingly TrendForce therefore believes that uncertainties will still exist in the NAND Flash market in 2H21 With regards to the NAND Flash wafer market, the current short supply can be attributed to the fact that demand is mainly focused on certain specific product generations The decline in NAND Flash wafer prices in 1H21 is thus drastically narrowed, while demand from mostly the server side will also provide some upward momentum for NAND Flash wafer prices afterwards However, Micron will ramp up its 176L products starting from 3Q21 As these products have been significantly improved in terms of cost, and the main NAND Flash applications will have transitioned to products with higher layer counts by then, the impact on NAND Flash wafer prices in 2H21 remains to be seen For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom

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