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Press Releases
Latest Assessment of Jan. 3 Earthquake in Taiwan Finds No Significant Impact on Local DRAM and Foundry Fabs, Says TrendForce

2022/01/04

Semiconductors

An earthquake that was around magnitude 60 on the Richter scale occurred off the east coast of Taiwan at 5:46PM local time on January 3, 2022 As most local DRAM and foundry fabs are located in the northern and central parts of the island, TrendForce’s latest investigations reveal no notable damages to the equipment from the fabs Therefore, the production side is expected to continue normal operation, and the actual impact of the earthquake on the output of Taiwan’s DRAM and foundry industries will likely be limited Taiwan’s memory fabs, including those operated by MTTW, Nanya, and other smaller semiconductor companies, collectively account for about 21% of the global DRAM production capacity In the foundry industry, Taiwan’s fabs, including those operated by TSMC, UMC, Vanguard, PSMC, etc, together make up as much as 51% of the global production capacity Regarding the current state of the DRAM market, it is in midst of the conventional off-season However, the recent easing of component gaps in the supply chain is generating some stock-up activities in different application segments and thus bolstering the overall demand The headwinds of the off-season are not as strong as usual Also, there are now concerns brewing in the wider memory market about the supply side being affected by the COVID-19 lockdown in the Chinese city of Xi’an Consequently, memory spot prices have been registering daily hikes lately It is worth noting that increases in DRAM spot prices have been more significant than the increases in NAND Flash spot prices Regarding DRAM contract prices, TrendForce for now maintains its original forecast of QoQ drops in the 8-13% range for 1Q22 However, the latest earthquake that struck Taiwan could affect DRAM buyers’ behavior at any time How contract prices will actually end up is something that requires further observation As for DRAM spot trading, the memory spot market of Mainland China was still in midst of the year-end holiday on January 3 Hence, spot traders were passive for the most part TrendForce will continue monitoring the spot market to see if the earthquake is going to be a positive driver going forward Turning to the current state of the foundry market, the chip demand related to some categories of end products has slowed down a bit recently because of seasonality However, demand remains quite strong for chips that were previously in short supply, such as PMIC, Wi-Fi SoC, etc Foundry fabs on the whole are still operating with a fully loaded capacity because demand continues to outstrip supply The fabs of Taiwan-based foundries, including TSMC, UMC, PSMC, and Vanguard, are concentrated in Hsinchu, Taichung, and Tainan In those places, an earthquake intensity scale of 3 or under was recorded As such, no foundry fab in Taiwan has halted operation because of the earthquake, and all fabs are operating normally at the moment 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 For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/

Press Releases
DRAM ASP Expected to Decline by 8-13% QoQ in 1Q22 Owing to Seasonal Demand Downturn, Says TrendForce

2021/12/13

Semiconductors

Regarding the shipment of various end products in 4Q21, the quarterly shipment of notebook computers is expected to remain about the same as 3Q21 figures, as prior component gaps were partially resolved during the quarter, according to TrendForce’s latest investigations As such, since PC OEMs’ DRAM inventory has lowered by several weeks, TrendForce has also further reduced its forecast of DRAM price drops for 1Q22 Even so, the overall demand for DRAM will still enter a cyclical downturn in 1Q22, during which DRAM ASP will also maintain a downward trajectory with an 8-13% QoQ decline Whether this price drop will subside going forward will depend on how well suppliers manage their inventory pressure and how DRAM purchasers anticipate further price changes Decline in PC DRAM prices will narrow somewhat as PC OEMs reduce inventory Whereas demand for Chromebooks has noticeably slowed down, demand for consumer and commercial notebooks remains strong Furthermore, certain components which were previously in shortage are starting to experience improved lead times Hence, quarterly shipment of notebook computers for 4Q21 will likely surpass earlier projections Looking ahead to 1Q22, not only will the demand side undergo a cyclical downturn, but the sufficiency ratio of PC DRAM will also surpass 30% following 4Q21’s high base period for comparison These factors will result in DRAM prices undergoing a noticeable decline, although PC OEMs will carry a lower inventory of DRAM in 1Q22 compared with 11-13 weeks of inventory in the previous quarter, thereby helping to curb the price drop of PC DRAM products On the other hand, as mobile DRAM prices begin to drop, certain DRAM suppliers have begun reallocating some of their production capacities from mobile DRAM to PC DRAM As a result, PC DRAM bit supply will likely undergo a corresponding increase in the short run In sum, although the above factors are able to provide some upside momentum that narrows the price drop of PC DRAM products, they are not enough to result in an upturn In particular, DDR4 and DDR5 PC DRAM will experience QoQ declines of 5-10% and 3-8%, respectively, for 1Q22, although the latter product will not noticeably impact the overall PC DRAM ASP, as its penetration rate is still relatively low Server DRAM prices will decrease by about 8-13% QoQ due to slowdown in procurement activities At the moment, CSPs and enterprise clients are carrying about 6-9 weeks and 8-10 weeks of server DRAM inventory, respectively Although these levels represent a slight decline compared to the end of 3Q21, this decline will not substantially contribute to an increase in demand Hence, server DRAM buyers will remain relatively conservative with regards to procurement activities before server DRAM prices reach a level that these buyers consider to be rock bottom DRAM suppliers’ inventory of server DRAM, on the other hand, has been gradually rising in 1H21 owing to decreased demand Furthermore, certain suppliers have ramped up their wafer input for server DRAM products, leading to an increased production In addition, while both buyers and sellers have reached a consensus on the falling prices of server DRAM, supply chain-related component gap issues have become gradually resolved, meaning Tier 1 clients will lessen their server DRAM procurement in the upcoming off-season As a result, suppliers will then be able to fulfill orders that were placed by Tier 2 clients but previously deferred because suppliers prioritized orders from Tier 1 clients These Tier 2 client orders will provide some upside demand for server DRAM, which is a component that is in relative surplus compared to other components TrendForce therefore expects server DRAM prices to decrease by 8-13% QoQ in 1Q22, during which server DRAM prices will experience the most severe declines compared to the other quarters in 2022 Mobile DRAM prices will decline by about 8-13% QoQ in light of intensifying oversupply Thanks to mobile DRAM suppliers’ aggressive sell-offs in 4Q21, smartphone brands still carry a high level of mobile DRAM inventory as of the end of 2021 Looking ahead to 1Q22, not only will the market welcome the arrival of the traditional off-season, but other issues with the supply of processor chip bundles and the impact of the COVID-19 pandemic will also result in a 10% QoQ drop in smartphone production for the quarter Smartphone brands will become even more careful with respect to their procurement activities so as to avoid continually accumulating inventory As smartphone brands revise down their production targets, market demand for mobile DRAM has therefore become weaker now than it was in 1H21, in turn exacerbating the oversupply situation, which is reflected in the persistently rising mobile DRAM inventory of DRAM suppliers On the whole, the aforementioned issues of high inventory levels and oversupply situation will lead smartphone brands to further conservatize their production and procurement plans in 1Q22 Given that suppliers have suggested a sales strategy of negotiating for 4Q21 and 1Q22 prices collectively, and both buying and selling sides are confronted with inventory pressure, TrendForce thus forecasts an 8-13% QoQ decline in mobile DRAM prices for 1Q22 Graphics DRAM prices will hold flat while demand improves and spot prices rises ahead of time The application demand for graphics DRAM has been recovering noticeably in the recent period Even so, it is worth pointing out that the graphics DRAM market is subject to a very high degree of fluctuations, and this situation is exacerbated by the introduction of the application demand from cryptocurrency mining in recent years Because the values of cryptocurrencies can swing dramatically, GPU manufacturers such as NVIDIA and AMD have to constantly adjust their sales strategies and switch between bundling and de-bundling In so doing, they are contributing to the rapid rise and fall of graphics DRAM demand The graphics DRAM products that the three dominant suppliers are now producing belong to the GDDR6 series The latest distribution of graphics DRAM output by chip type shows that suppliers are also gradually shifting their focus from 8Gb to 16Gb Micron, in particular, is the most proactive in this transition On the other hand, the mainstream graphics cards are still using 8Gb chips at this moment, so the demand for 8Gb graphics DRAM chips has actually increased In addition, spot prices of both GDDR5 8Gb and GDDR6 8Gb chips have experienced huge price hikes Due to this uptrend in spot prices, the difference between spot and contract prices is now negligible for graphics DRAM Some spot transactions even reveal prices that are higher than contract prices This latest development reflects the situation where buyers are more proactive in price negotiations Prices of graphics DRAM products on the whole will be fairly constrained from declining further due to the rise in spot prices, the aforementioned demand turnaround, and Micron’s decision to scale back production for 8Gb chips Taking these factors into account, TrendForce expects that the overall price trend will stay mostly flat DDR3 Consumer DRAM prices will drop by about 3-8% QoQ despite reduced supply The demand for consumer (specialty) DRAM is expected to be relatively weak in 1Q22 due to the effect of the traditional off-season for consumer electronics Also, demand will stay fairly depressed for TVs, which represent the leading source of in-home entertainment spending This is because countries around the world will continue in their attempts to lift their pandemic-related restrictions In addition to these factors, component gaps in the supply chain will still be a serious challenge for device manufacturers As DRAM components are in excess supply relative to non-memory components, device manufacturers will be less willing to stock up on the former Suppliers have been slow to scale back production for DDR3 products this year because prices of DDR3 products surged during the first half of the year However, the downward pressure on prices has now become much more significant, so the two leading South Korean suppliers have taken the initiative to revise their product mix strategies Hence, they will again transfer more of their mature wafer processing capacity from DDR3 products to CMOS image sensors or logic ICs Turning to price trend, TrendForce points to the strong correlation between DDR4 consumer DRAM products and PC DRAM products The latter were the first to experience a weakening of demand, and their prices have already made a downward turn in 4Q21 Looking ahead to 1Q22, contract prices of PC DRAM products will keep falling because of their significant difference with spot prices This means that DDR4 consumer DRAM products will also suffer sliding prices for 1Q22 with QoQ declines reaching 5-10% Looking at DDR3 consumer DRAM products, their prices will also drop even as their supply is shrinking Contract prices of DDR3 2Gb chips are projected fall by 3-8% QoQ on average for 1Q22, whereas DDR3 4Gb chips are projected to register larger declines 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 For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/

Press Releases
Annual DRAM Revenue for 2022 Expected to Reach US$91.5 Billion, with Prices Likely to Rally in 2H22, Says TrendForce

2021/11/04

Semiconductors

Despite the forecasted 186% YoY growth in total DRAM bit supply next year, the global DRAM market is still expected to shift from a shortage situation to an oversupply, according to TrendForce’s latest investigations This shift can primarily be attributed to the fact that, not only are most buyers now carrying a relatively high level of DRAM inventory, but DRAM bit demand is also expected to increase by only 171% YoY in 2022 On the price front, the oversupply situation will result in a drop in DRAM ASP in 2022 but not a major decline in annual DRAM revenue, thanks to the oligopolistic nature of the DRAM industry Annual DRAM revenue for 2022 is expected to reach US$9154 billion, which represents a slight YoY increase of 03% Based on an analysis of DRAM sufficiency ratio (which refers to the surplus of supply in comparison with demand) for each quarter in 2022, TrendForce forecasts a 15% YoY decrease in DRAM ASP for 2022, with prices undergoing the more noticeable declines during the first half of the year Heading into 2H22, however, owing to the rise in DDR5 penetration rate, as well as the arrival of peak seasonal demand, the decline in DRAM ASP will likely narrow TrendForce does not rule out the possibility that DRAM ASP may even hold flat or undergo an increase in 2H22 Annual NAND Flash revenue is expected to experience yet another increase next year by 74% YoY while numerous suppliers compete in higher-layer NAND Flash market segment Turning to the NAND Flash market, TrendForce forecasts a 318% increase in total bit supply for 2022 and a 308% increase in total bit demand Hence, NAND Flash ASP will likely experience a downtrend next year as a result of the oversupply situation In addition, due to the perfect competition in the NAND Flash market, the decline in NAND Flash ASP next year will be more noticeable than the decline in DRAM ASP However, NAND Flash suppliers continues to make progress in the stacking of NAND Flash layers, so the growth in NAND Flash bit supply next year will therefore remain above 30% TrendForce thus expects NAND Flash revenue to have more room for growth and reach US$7419 billion in 2022, a 74% YoY increase TrendForce’s forecast based on an analysis of NAND Flash sufficiency ratios for each quarter in 2022 similarly points to an 180% YoY decline in NAND Flash ASP next year Much like DRAM, NAND Flash prices will undergo the more noticeable declines during 1H22 Arrival of peak seasonal demand in 2H22 will potentially result in a narrowing of price drops and a potential for quarterly prices to hold flat On the whole, the revenue performance of the DRAM industry and that of the NAND Flash industry over the years show that the annual total DRAM revenue is growing at more stable pace Again, this has to do with the oligopolistic structure of the DRAM market Since the DRAM market has a different competitive landscape, the fluctuations in the overall DRAM ASP have been relatively modest over the long run However, the development of the DRAM manufacturing technology is approaching a physical bottleneck as process nodes shrink below the 20nm level This means that the bit growth derived from the deployment of a more advanced process is becoming more and more limited over the years On the other hand, not only are NAND Flash suppliers relatively more unstable in their capacity expansion plans compared to the DRAM industry, but further improvements in NAND Flash layer-stacking technology also remains feasible Hence, the fluctuations in the overall NAND Flash ASP have been relatively more volatile over the long run On account of these factors, the DRAM industry generally has smaller YoY revenue growth rates compared with the NAND Flash industry, although the DRAM industry continues to surpass the NAND Flash industry in terms of profitability Profitability of suppliers may be constrained if total revenue fails to keep pace with continuously rising CAPEX Regarding the CAPEX (capital expenditures) of DRAM suppliers, there has been a gradual increase in these suppliers’ CAPEX to sales ratio in recent years, for two reasons First, the development of the DRAM manufacturing technology is approaching a physical bottleneck Die improvements have become more and more limited after process nodes have shrunk below the 20nm level Micron’s 1alpha nm process can offer an almost 30% increase in bits per wafer, but the 1Xnm-to-1Ynm migrations and the subsequent 1Ynm-to-1Znm migrations that the major suppliers have undertaken in the recent period have yielded increases of no more than 15% in bits per wafer Looking at future technological developments, Samsung and SK hynix have already integrated EUV lithography into their most advanced process technologies However, orders for EUV lithography tools have a much longer lead time, and the costs of these tools are also high Hence, the three dominant suppliers have allocated a large chunk of capital expenditure in advance to place orders for EUV lithography tools ahead of time Secondly, the oligopolistic structure of the DRAM market has also helped establish a regime where there is a very low chance of a supplier’s ASP dipping under its fully-loaded cost despite the recurrence of the cyclical price downturn Moreover, DRAM suppliers have accumulated a substantial amount of profit from their products In view of the difficulties in die shrinking, suppliers ranging from the three dominant suppliers to others with less market share (such as Nanya Tech and Winbond) have developed tangible plans for capacity expansions These plans have, in turn, become the other main driver behind the ongoing increase in the CAPEX to sales ratio The CAPEX to sales ratio of NAND Flash suppliers have likewise risen substantially following the transition to 3D NAND technology in 2017 Notably, the average CAPEX to sales ratio fell within the 25-30% range prior to 2017, but it has since climbed to nearly 40% as of now This growth can primarily be attributed to the fact that, as the number of 3D NAND layers increases, there is a corresponding increase in the lead times of NAND Flash products and in the degree of precision as well as difficulty involved in the etching process While the mainstream layer count of NAND Flash products approaches 1YY layers, suppliers are currently planning to move forward with the development of products with 2XX layers, which place an ever-increasing demand on etch depth The CAPEX of NAND Flash suppliers will continue to grow alongside increases in layer count and revenue TrendForce indicates that NAND Flash layer-stacking technology will continue to progress, meaning suppliers will continue to pursue the stacking of additional layers as a way to lower their manufacturing cost per GB As such, the NAND Flash industry’s CAPEX will have additional potential for growth going forward, with a CAPEX to sales ratio of close to 40% or above It should be noted, however, that if total NAND Flash revenue fails to keep pace with the growth in CAPEX in the next few years, NAND Flash suppliers’ CAPEX to sales ratio may potentially undergo an excessive increase, thereby constraining the profitability of suppliers 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 For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/

Press Releases
DRAM Prices Projected to Enter Period of Downswing in 2022 as Demand Lags Behind Supply, Says TrendForce

2021/10/12

Semiconductors

DRAM contract prices are likely to exit a bullish period that lasted three quarters and be on the downswing in 4Q21 at a QoQ decline of 3-8%, according to TrendForce’s latest investigations This decline can be attributed to not only the declining procurement activities of DRAM buyers going forward, but also the drop in DRAM spot prices ahead of contract prices While the buying and selling sides attempt to gain the advantage in future transactions, the DRAM market’s movement in 2022 will primarily be determined by suppliers’ capacity expansion strategies in conjunction with potential growths in demand The capacity expansion plans of the three largest DRAM suppliers (Samsung, SK hynix, and Micron) for 2022 are expected to remain conservative, resulting in a 179% growth in total DRAM bit supply next year On the demand side, inventory levels at the moment are relatively high Hence, DRAM bit demand is expected to grow by 163% next year and lag behind bit supply growth TrendForce therefore forecasts a shift in the DRAM market next year from shortage to surplus Total DRAM bit supply is projected to grow by 179% in 2022 in light of DRAM suppliers’ low inventory levels and resurging demand in the server market As buyers expanded their DRAM procurement in 1H21 in response to supply chain disruptions, DRAM suppliers were able to register better-than-expected shipment performances and reduce their inventory levels considerably These suppliers are now bullish on the growth of DRAM bit demand generated by the resurging server market In particular, while Samsung and SK hynix have marginally increased their wafer input for DRAM products, DRAM suppliers’ process technologies are continuing to migrate towards the 1Z nm and 1alpha nm nodes TrendForce therefore expects total DRAM bit supply to increase by 179% YoY in 2022 Most of Samsung’s wafer input growth takes place in the P2L fab, which houses relatively large physical spaces As the prevailing market leader, Samsung will likely continue to increase wafer input for DRAM products going forward The company’s DRAM bit supply growth for 2022 is expected to reach 196%, the highest out of the three dominant suppliers, despite the relatively modest growth in Samsung’s current wafer input, most of which comes from advanced process technologies It should also be pointed out that Samsung’s newest fab P3L is expected to be fully built by mid-2022 P3L will likely contribute to DRAM production by a limited amount next year but continue to provide further growth for Samsung’s DRAM supply after 2023 Given the bear market for DDR3 memory, SK hynix will likely speed up the reallocation of wafer capacity from DRAM to logic IC products at its old M10 fab next year After kicking off DRAM production at its newest M16 fab this year, SK hynix will see its total production capacity for DRAM chips continue expanding in 2022, although the company will also adjust its DRAM output according to the state of the market SK hynix is currently focused on raising the yield rates of its 1Y nm and 1Z nm process technologies, which will contribute to the forecasted 177% increase in SK hynix’s total DRAM bit supply next year The latest expansions at Micron’s A3 fab are primarily undertaken as a safeguard against possible wafer losses during the fab’s upcoming transition to next-gen process technologies Hence, Micron’s total production capacity will unlikely undergo drastic changes for the 2021-2022 period, and growths in its DRAM bit output will be mostly derived from the increased yield of the 1Z nm and the latest 1alpha nm process technologies In addition, DRAM products manufactured with Micron’s 1alpha nm process technology have been widely adopted by clients, and Micron has been making the fastest progress in terms of process technology migration among the three largest DRAM suppliers The company is expected to increase its DRAM bit supply by 163% next year Regarding Taiwanese suppliers, Nanya Tech is expected to finalize the construction of its new fab in 2024, while Winbond’s new fab is expected to kick off only pilot runs in 2H22 Taiwanese suppliers are therefore expected to make very limited contributions to the increase in total DRAM bit supply in 2022 DRAM bit demand is expected to increase by merely 163% in 2022, as the bear market for various products results in a high base period in 2021 The smartphone, server, and notebook computer segments comprise the three largest sources of DRAM consumption All three product categories have been seeing tremendous growth in 2021, thereby resulting in a high base period for comparison against next year’s figures, meaning that significant YoY growths in these products’ production and shipment, and subsequently their DRAM consumption, for 2022 are unlikely to take place Furthermore, the ongoing shortage of components has continued to affect various industries and constrain device assembly, leading to a decline in demand for DRAM, since OEMs/ODMs are carrying a relatively high level of DRAM inventory For 2022, DRAM bit demand is expected to increase by only 163% and lag behind DRAM bit supply Regarding smartphones, while the shortage of key components such as chipsets and driver ICs remains unresolved, total smartphone shipment for 1Q22, which is already a period of cyclical downturn, will fall below expectations Although the upcoming release of new models is expected to bring about quarterly increases in smartphone production, TrendForce’s current forecast indicates an annual production volume of about 14 billion units for 2022, a modest 35% YoY growth This forecasted figure will likely be subject to additional declines if the shortage of semiconductor components extends further As such, the main growth driver of mobile DRAM demand in 2022 is expected to be the increase in “content per box” (which refers to the total DRAM contained within each individual handset) For 2022, mobile DRAM will account for approximately 40% of total DRAM bit consumption; there will likely be a 15% increase in mobile DRAM bit demand as well This increase represents a relatively sluggish performance, as mobile DRAM demand generally increased by more than 20% YoY in previous years The server industry likewise faced supply chain-related issues, including disruptions in server assembly operations based in Southeast Asia, as well as shortages of PMICs and passive components With these issues projected to persist through 2022, total server shipment is expected to increase by 43% in 2022, primarily thanks to CSPs’ data center expansions On the other hand, the rise in Intel Ice Lake CPUs’ market share this year has led DRAM suppliers to manufacture more high-density dies (16Gb mono die) due to the server market’s surging demand for 64GB modules Once Intel’s next-gen Xeon server CPUs, Sapphire Rapids, enter the market next year, the penetration rate of 64GB server DRAM modules is expected to surpass 60% Hence, server DRAM bit demand is projected to increase by 20% in 2022, the highest among all DRAM product categories Annual shipment of notebook computers for 2022 is projected to reach 222 million units, a nearly 7% YoY decrease, owing to increased vaccination rates in Europe and North America However, as WFH and distance education become the norm, annual notebook shipment will undergo some growth in the medium to long term, without falling back down to pre-pandemic levels Although Chromebooks remained the fastest-growing product category among all notebooks in 1H21, demand for Chromebooks has been steadily declining in 2H21 due to the increased Chromebook inventory carried by distribution channels in response to high demand for educational notebooks in 1H21 Instead, demand has shifted to commercial notebooks, which are equipped with more DRAM capacity, and this shift will persist through 2022 Total PC DRAM bit demand is expected to increase by more than 15% next year DRAM revenue for 2022 will likely be mostly flat as bit shipment growth offsets decline in quotes On the whole, DRAM suppliers have performed exceptionally well this year in terms of bit shipments thanks to OEMs’ energetic stock-up activities The annual total revenue of the DRAM industry is also projected to surpass US$90 billion in 2021 because of the price uptrend and the growth in bit shipments However, the DRAM market will begin to see prices falling in 4Q21 and a sharpening downtrend in 1H22 The overall ASP of DRAM products for the whole 2022 is projected to register a YoY drop of 15-20% On the other hand, the YoY growth rates of DRAM suppliers’ bit shipments will also be within a similar range for next year This means that the bit shipment growth will mostly offset the price decline, thereby keeping the total DRAM revenue for 2022 at a similar level to this year There are still uncertainties as to the movements of DRAM prices during 2H22 If prices manage to rally, then the annual total DRAM revenue may again reach a new high 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 For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/

Press Releases
DRAM Prices Projected to Decline by 3-8% QoQ in 4Q21 Due to Rising Level of Client Inventory, Says TrendForce

2021/09/22

Semiconductors

Following the peak period of production in 3Q21, the supply of DRAM will likely begin to outpace demand in 4Q21, according to TrendForce’s latest investigations (the surplus of DRAM supply is henceforth referred to as “sufficiency ratio”, expressed as a percentage) In addition, while DRAM suppliers are generally carrying a healthy level of inventory, most of their clients in the end-product markets are carrying a higher level of DRAM inventory than what is considered healthy, meaning these clients will be less willing to procure additional DRAM going forward TrendForce therefore forecasts a downward trajectory for DRAM ASP in 4Q21 More specifically, DRAM products that are currently in oversupply may experience price drops of more than 5% QoQ, and the overall DRAM ASP will likely decline by about 3-8% QoQ in 4Q21 PC DRAM prices are expected to decline by 5-10% QoQ as market demand for notebook computers weakens Although WFH and distance learning applications previously generated high demand for notebook computers, increasingly widespread vaccinations in Europe and North America have now weakened this demand, particularly for Chromebooks As a result, global production of notebooks is expected to decline in 4Q21, in turn propelling the sufficiency ratio of PC DRAM to 138%, which indicates that PC DRAM will no longer be in short supply in 4Q21 However, PC DRAM accounts for a relatively low share of DRAM manufacturers’ DRAM supply bits, since these suppliers have allocated more production capacities to server DRAM, which is in relatively high demand Hence, there will unlikely be a severe surplus of PC DRAM in 4Q21 It should also be pointed out that, on average, the current spot prices of PC DRAM modules are far lower than their contract prices for 3Q21 TrendForce therefore expects an imminent 5-10% QoQ decline in PC DRAM contract prices for 4Q21, with potential for declines that are even greater than 10% for certain transactions, as PC OEMs anticipate further price drops in PC DRAM prices in the future Server DRAM prices are expected to decline for the first time this year, by 0-5% QoQ due to high client-side inventory CSPs in North America and China currently carry more than eight weeks’ worth of server DRAM inventory, with some carrying more than 10 weeks’ worth of inventory, as they procured massive amounts of server DRAM in the previous two quarters to avoid shipment issues with whole server units caused by component shortages In view of this aggressive procurement effort, the overall demand for server DRAM has gradually slowed, although certain Tier 2 data centers are still procuring server DRAM to make up for previous gaps As server DRAM buyers continue to gravitate towards destocking their server DRAM inventory in 4Q21, demand will likely fall short of the previous quarters Furthermore, due to long lead times for certain key components, shipment of whole servers is also expected to undergo quarterly declines On the supply side, the three major DRAM suppliers (Samsung, SK hynix, and Micron) reallocated some of their production capacity for mobile DRAM to server DRAM in early 2Q21, and this reallocated capacity is expected to gradually begin outputting server DRAM in 4Q21 Given the slowdown in server DRAM demand, contract negotiations for server DRAM procurement in 3Q21 lasted until early August Although server DRAM contract prices underwent a 5-10% QoQ increase in 3Q21 due to suppliers’ best attempts during contract negotiations, further price hikes going forward are unlikely TrendForce expects server DRAM prices to undergo a decline for the first time this year in 4Q21 with a QoQ drop of 0-5% Mobile DRAM prices are expected to remain relative unchanged from 3Q21 levels despite a possible price drop ahead of time at the end of the year In light of fluctuations in the COVID-19 pandemic, the global demand for smartphones and the supply of smartphone components are both still at the risk of experiencing declines In addition, after smartphone brands revised down their production targets at the end of 2Q21, brands and distributors alike have been facing the pressure of high smartphone inventory levels In response to factors such as pandemic-related uncertainties and declines in mobile DRAM prices for 2022, smartphone brands will slow down their mobile DRAM procurement and prioritize inventory reduction instead Hence, bit demand for mobile DRAM will decline even further in 4Q21 On the whole, given the uncertain state of the pandemic in the coming winter, smartphone brands will adopt a more conservative attitude towards both smartphone production and component procurement in 4Q21 As a result, even if DRAM suppliers are willing to lower mobile DRAM prices, such an effort will only result in limited sales growths In addition, mobile DRAM still lags behind other DRAM product categories in terms of profitability, meaning a drop in mobile DRAM prices is unlikely Taking these factors into account, TrendForce expects prices of discrete DRAM, eMCP, and uMCP to mostly hold flat in 4Q21 compared with 3Q21 It should be noted that, by the end of the year, DRAM suppliers may potentially start supplying mobile DRAM at 1Q22 prices ahead of time, primarily for two reasons: First, DRAM suppliers will be faced with revenue performance pressures at the end of the year; second, smartphones and DRAM suppliers will enter into new LTAs (long term agreements) for 2022 These factors are expected to impact mobile DRAM ASP for 4Q21 and bring about a price drop ahead of time Graphics DRAM contract prices are expected to decline by 0-5% QoQ due to excess supply Market demand for discrete graphics cards and notebook graphics cards still remains due to the stable market for commercial notebooks and the resurging cryptocurrency mining market, which saw cryptocurrency prices rebounding from rock bottom levels within the past two months However, severe issues with the availability of components in the graphics card supply chain currently present the most significant bottleneck in graphics card production In particular, components such as driver IC, PMIC, and other peripheral components are all in shortage, while graphics DRAM is in relative oversupply compared to these other components Graphics card manufacturers are therefore revising down their graphics DRAM procurement Consequently, even though DRAM suppliers have not significantly increased their graphics DRAM production, demand from the purchasing end will remain sluggish until the shortage of other components is resolved Demand for graphics DRAM will unlikely see a resurgence before the end of 2021 On the supply side, the three major DRAM suppliers are primarily focused on GDDR6 for their current graphics DRAM production As well, graphics card demand from the cryptocurrency mining market is generally aimed at newer graphics cards that feature GDDR6 memory Accordingly, both production and sales of GDDR5 memory are relatively weak, and this bearish trend is especially reflected in spot prices As spot prices are the first to enter a downturn, and the aforementioned market conditions lead to sluggish procurement activities, graphics DRAM prices are in turn expected to plummet from previous levels in 4Q21, although this decline is projected at a minor 0-5% QoQ owing to DRAM suppliers’ efforts to keep prices constant QoQ decline of DDR4 Consumer DRAM prices is expected to be among the highest drops, at 5-10% as procurement activities decelerate Gradual easing of lockdowns in Europe and North America has led to a decline in consumer spending on home entertainment applications This, along with the severe shortage in electronic components, has adversely affected the demand for consumer electronics, such as TVs, STBs (set-top boxes), and networking devices, as well as industrial-use products, thereby also reducing the procurement demand for consumer DRAM On the other hand, while DRAM suppliers were in the process of transitioning from DDR3 manufacturing to other products, the massive price hike of DDR3 products in 1H21 led DRAM suppliers to slow this transition Even so, certain market conditions are now placing downward pressure on DDR3 prices, so next year the three major suppliers may potentially speed up the transition of mature DDR3 manufacturing to other products, such as CMOS image sensors or other logic ICs, instead As server and PC manufacturers’ DRAM inventory level rises, contract prices of those DRAM products will likely decline in 4Q21 Thus, given that the movement of DDR4 consumer DRAM prices is highly correlated with PC DRAM and server DRAM and has been trending relatively high, DDR4 consumer DRAM prices are expected to decline by 5-10% QoQ in 4Q21 Likewise, although the supply of DDR3 consumer DRAM has been gradually decreasing, DDR3 consumer DRAM prices will also undergo an overall decline, particularly for 4Gb chips DDR3 consumer DRAM prices are expected to decline by 3-8% QoQ in 4Q21 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 For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/

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