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2021/06/09
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
TrendForce expects four key factors to continue driving up graphics DRAM prices in the contract market First of all, demand in the PC market remains high, particularly for gaming products Secondly, DRAM suppliers' production capacities allocated to most clients are constrained by the fact that Nvidia bundles its GPUs with graphics DRAM, meaning DRAM suppliers have prioritized capacity allocation to Nvidia as opposed to smaller clients Thirdly, both the Xbox Series X and PS5 are equipped with GDDR6 16Gb chips, which is different from GDDR6 8Gb chips As the two chips are non-interchangeable, once DRAM suppliers commit their production capacities for one, they can no longer produce the other using the same batch of wafers Finally, since there has been a resurgence of server DRAM orders, DRAM suppliers are still prioritizing the production of these products as they are a mainstream market product As various products each compete over limited DRAM production capacities, graphics DRAM contract prices are expected to undergo an increase going forward In particular, medium- and small-size OEMs/ODMs may likely face double-digit percentages increases
Sharp drop in values of cryptocurrencies has caused spot prices of GDDR5 and GDDR6 products to fall
Regarding the spot market, although spot prices for GDDR6 products has been undergoing a slight drop since May, they are still nearly 100% higher than the average contract prices Conversely, there is almost no difference between spot and contract prices for GDDR5 products Looking at the reasons behind the slide in spot prices of graphics DRAM products, a sharp drop in the values of cryptocurrencies is the most significant contributor apart from the excessively large difference between spot and contract prices The recent bearish movement of cryptocurrencies has resulted in a sharp drop in incentives for miners In turn, this has led to a corresponding drop for older graphics (such as the Nvidia GTX 1660, which features GDDR5 DRAM), which have no other sources of demand GDDR5 prices hence entered a significant decline With regards to newer graphics cards, however, there is still a baseline level of demand for them thanks to purchases by gamers Furthermore, these newer graphics cards, much like the new generation of game consoles, feature GDDR6 DRAM Therefore, due to the current demand for GDDR6 products, their price drop in the spot market is lower compared to GDDR5 products
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/
2021/06/08
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%)
High inventory may pose potential risk for smartphone brands in 2H21 due to decreased smartphone production targets
Under the market spotlight are smartphone brands and notebook manufacturers, which drastically differ in their inventory levels Regarding the smartphone market, TrendForce has already lowered the YoY growth rate of the global total smartphone production in 2021 to 85% from the previous projection of 94% as the second wave of the COVID-19 pandemic takes place across India Presently, smartphone brands are carrying 8-10 weeks of inventory on average for DRAM and NAND Flash Two newly emerged factors are generating some concerns about the high level of inventory First, Chinese brands have lowered their production targets and begun to adjust inventories in order to address the issue of component gaps Second, Southeast Asia is bracing for a resurgence of COVID-19 outbreaks that could disrupt smartphone production and weaken consumer demand
PC OEMs are holding up to 10 weeks’ worth of DRAM inventory on average; price hike of PC DRAM in 2H21 will likely be limited as a result
Regarding the notebook market, on the other hand, PC OEMs are currently carrying about 8-10 weeks’ worth of DRAM inventory on average, with some PC OEMs having an even higher inventory level, primarily because the stay-at-home economy this year will continue to propel the demand for notebook computers, about 238 million units of which are expected to be produced this year, a 143% increase YoY Furthermore, in view of the shortage of components in the upstream supply chain, including audio CODECs, analog ICs, power ICs, MCUs, and LED drivers, PC OEMs are anticipating that DRAM will be in similar shortage as well, thus potentially leading to an inability to manufacture notebooks In response, PC OEMs are therefore prompted to expand their DRAM procurement in 1H21 On the NAND Flash front, the persistent shortage of NAND Flash controller ICs means that PC OEMs generally carry about 4-5 weeks’ worth of NAND Flash inventory on average, which is relatively lower than their DRAM inventory
TrendForce forecasts that Chinese smartphone brands will slow down their procurement of mobile DRAM and NAND Flash solutions during 2H21 However, contract prices of memory products on the whole will unlikely experience a general decline in the second half of the year because demand remains fairly robust in other application segments On the PC and NB front, changes in the fulfillment rates of components that are in shortage will become the key determinant of how PC OEMs evaluate their inventory of well-stocked components It should be pointed out that, as PC OEMs have been maintaining a relatively high inventory of DRAM, the increase in PC DRAM prices in 2H21 will be markedly muted as a result
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/
2021/05/11
Demand for DRAM exceeded expectations in 1Q21 as the proliferation of WFH and distance education resulted in high demand for notebook computers against market headwinds, according to TrendForce’s latest investigations Also contributing to the increased DRAM demand was Chinese smartphone brands’ ramp-up of component procurement while these companies, including OPPO, Vivo, and Xiaomi, attempted to seize additional market shares after Huawei’s inclusion on the Entity List Finally, DRAM demand from server manufacturers also saw a gradual recovery Taken together, these factors led to higher-than-expected shipments from various DRAM suppliers in 1Q21 despite the frequent shortage of such key components as IC and passive components On the other hand, DRAM prices also entered an upward trajectory in 1Q21 in accordance with TrendForce’s previous forecasts In light of the increases in both shipments and quotes, all DRAM suppliers posted revenue growths in 1Q21, and overall DRAM revenue for the quarter reached US$192 billion, an 87% growth QoQ
Demand for PC, mobile, graphics, and special DRAM remains healthy in 2Q21 Furthermore, after two to three quarters of inventory reduction during which their DRAM demand was relatively sluggish, some server manufacturers have now kicked off a new round of procurement as they expect a persistent increase in DRAM prices TrendForce therefore forecasts a significant QoQ increase in DRAM ASP in 2Q21 In conjunction with increased bit shipment, this price hike will likely drive total DRAM revenue for 2Q21 to increase by more than 20% QoQ
Rebounding DRAM prices were the primary revenue driver for major suppliers in 1Q21
With regards to revenue, the three largest DRAM suppliers saw increases in both ASP and bit shipment Their better-than-expected shipment performances can mostly be attributed to the fact that an increase in DRAM quotes prompted buyers to ramp up their procurement efforts ahead of time In particular, Samsung, SK Hynix, and Micron saw QoQ increases of 85%, 69%, and 96%, respectively, in their revenues in 1Q21, although their market shares remained largely unchanged, with only Micron registering a slight gain, at a 231% market share Going forward, the three suppliers’ market shares will unlikely undergo drastic changes in 2Q21
With regards to profitability, despite the 0-5% increase in DRAM ASP in 1Q21, suppliers registered varying quarterly performances because they each had varying schedules of migrating to advanced process technologies For instance, Samsung’s 1Znm process had a relatively low yield rate in 1Q21 as the company had only initially kicked off mass production with the 1Znm process As such, the company’s operating profit margin dropped from 36% in 4Q20 to 34% in 1Q21 On the other hand, SK Hynix benefitted from improvements in the yield rate of its new process technologies and saw a corresponding improvement in its operating profit margin from 26% in 4Q20 to 29% in 1Q21 Finally, Micron’s quotes for the Dec 2020 to Feb 2021 fiscal period increased by a similar margin compared to its Korean competitors, and its operating profit margin for this fiscal period likewise rose to 26%, from 21% in the prior quarter On the whole, TrendForce expects these suppliers to experience considerable improvements in their profitability in 2Q21 due to surging quotes In particular, as the yield rate of Samsung’s 1Znm process approaches mature levels, Samsung will likely register the highest growth in operating profit margin among the three suppliers
DRAM suppliers will accelerate their capacity expansion plans in 2H21 in light of bullish DRAM demand
The three largest DRAM suppliers have been responding to the rising demand for DRAM from various end-product segments by accelerating their capacity expansions and advanced process migrations However, the newly added production capacities will not have a noticeable effect on the supply and demand of the DRAM market this year because most of these capacities will be installed in 1H22 With regards to the three aforementioned suppliers, Samsung is not only slowing down the transition of its Line 13 from DRAM manufacturing to CIS (CMOS image sensor) manufacturing, but also aiming to expand the production capacity of its Pyeongtaek-based P2L fab by the end of the year, in response to the bullish uptrend in specialty DRAM demand
SK Hynix is both slowing down the transition of its M10 fab from DRAM manufacturing to logic IC manufacturing and reallocating some of its 2022 capital expenditure to 2021 Although there will likely be a slight increase in the wafer input for DRAM at SK Hynix’s new M16 fab at the end of 2021, the growth in SK Hynix’s supply bits this year will be mostly derived from the increased share of DRAM manufactured with the 1Ynm and 1Znm processes Last but not least, Micron is continuing to focus on 1Znm and 1αnm mass production, in addition to raising the share of DRAM manufactured with these processes in its total DRAM bit output this year Owing to its cost advantage, the 1Znm process has become the primary focus of Micron’s process developments This process is also being widely used for various DRAM products manufactured by the company Furthermore, Micron is making a fast push for next-gen process migration by submitting its next-gen 1αnm DRAM products for verification Regardless, the company’s DRAM wafer input this year is expected to remain unchanged from last year, since Micron will not expand its total production capacity by constructing additional fabs in 2021
Taiwanese suppliers are dynamically adjusting their production capacities ahead of price hikes in the bullish specialty DRAM market
Compared with the three major suppliers, Taiwanese suppliers have been posting even better performances, primarily because specialty DRAM underwent the first and most significant price hike among all DRAM product categories More specifically, Nanya Tech benefitted the most from the surge in specialty DRAM quotes and experienced a QoQ growth of 217% in its revenue for 1Q21, with a corresponding surge in its operating profit margins from 88% in 4Q20 to 171% in 1Q21 Winbond had a relatively healthy level of client orders throughout 1Q21, during which its specialty DRAM and NAND Flash businesses demonstrated the most remarkable performances Given that the specialty DRAM segment was the first to recover among all DRAM categories, Winbond’s DRAM revenue increased by 9% QoQ in 1Q21 Even so, TrendForce believes that Winbond will not make noticeable contributions towards alleviating the current shortage of specialty DRAM until its Luzhu-based fab in Kaohsiung kicks off mass production in 2022 PSMC’s revenue for 1Q21, which includes only revenue from its in-house PC DRAM products and excludes revenue from its DRAM foundry services, underwent an approximately 7% growth QoQ, though this figure is about 16% if the latter were also included
In response to the current DRAM shortage, the three Taiwanese suppliers have been quick to maximize their production efficiencies by migrating some of their production capacities to products in which they have a competitive advantage For instance, Nanya Tech has migrated some of their 20nm production capacity from DDR4 DRAM to DDR3 DRAM since the latter is currently more profitable than the former Conversely, Winbond is allocating its limited DRAM production capacities primarily to low-density products (which are among the most niche products) since doing so gives Winbond substantial power to dictate prices in this product segment PSMC is profiting from the high demand for logic IC and specialty DRAM by prioritizing its capacity allocation between the two products based on their respective quote levels
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
2021/04/20
TrendForce’s investigations find that DRAM suppliers and major PC OEMs are currently participating in the critical period of negotiating with each other over contract prices for 2Q21 Although these negotiations have yet to be finalized, the ASP of mainstream DDR4 1G*8 2666Mbps modules has already increased by nearly 25% QoQ as of now, according to data on ongoing transactions This represents a higher price hike than TrendForce's prior forecast of “nearly 20%” On the other hand, prices are likewise rising across various DRAM product categories in 2Q21, including DDR3/4 specialty DRAM, mobile DRAM, graphics DRAM, and in particular server DRAM, which is highly related to PC DRAM and is therefore also undergoing a higher price hike than previously expected TrendForce is therefore revising up its forecast of overall DRAM price hike for 2Q21 from 13-18% QoQ to 18-23% QoQ instead However, the actual increase in prices of various DRAM product categories will depend on the production capacities allocated to the respective products by DRAM suppliers
PC DRAM prices are now expected to undergo a 23-28% QoQ growth in 2Q21 due to the increased production of notebook computers
PC DRAM contract prices are rising by a higher margin than previously expected for 2Q21 primarily because major PC OEMs are now aggressively expanding their production targets Furthermore, as second quarters are generally peak seasons for notebook production, PC ODMs are now estimated to increase their quarterly production of notebook computers by about 79% QoQ in 2Q21 Finally, with regards to the COVID-19 pandemic, vaccination rates remain relatively low across the globe, meaning WFH and distance education are likely to persist and create continued demand for notebook computers, thereby further expanding the hike in PC DRAM prices
DRAM Suppliers will enjoy increased bargaining power in price negotiations as server DRAM prices are expected to increase by 20-25% QoQ in 2Q21
Apart from the issue of short DRAM supply, server DRAM procurement in 2Q21 has benefitted from the positive turn in the view of enterprises toward IT investments as well as the stronger-than-expected demand related to cloud migration There was already a supply gap in 1Q21, and these developments will further drive up demand in 2Q21 Hence, difficulty has increased for buyers and suppliers in reaching an agreement on price Suppliers are in a more advantageous position in contract negotiations since the DRAM market is an oligopoly Therefore, compared to the previous forecast of nearly 20%, TrendForce is now expecting server DRAM contract prices to increase by 20-25% QoQ in 2Q21
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
2021/03/10
There are four major categories of automotive DRAM applications, including infotainment, ADAS, telematics, and D-clusters (digital instrument clusters), according to TrendForce’s latest investigations Of the four categories, infotainment applications require the highest DRAM content, although DRAM consumption per vehicle across all four categories remains relatively low at the moment In contrast to ADAS, infotainment applications present a lower barrier to entry for companies, since current legislations and automotive safety standards governing infotainment are not as stringent, making infotainment a highly attractive market for various semiconductor companies and memory suppliers TrendForce expects infotainment to remain the primary driver of automotive DRAM consumption through 2024, while all four automotive DRAM applications will together likely comprise more than 3% of total DRAM consumption as autonomous driving technology progresses toward higher levels As such, automotive DRAM applications represents an emerging sector whose potential for growth should not be underestimated
TrendForce further indicates that the safety requirements of automotive parts are far higher than those of consumer electronics in terms of both quality and durability As a result, the release of new vehicle models may take up to 3-5 years from development and verification to release Vehicles still under development are therefore likely to greatly surpass existing models in terms of both memory content and specifications
Infotainment will comprise the majority of automotive DRAM consumption, while total automotive DRAM consumption is still relatively low
Infotainment applications represent the highest bit consumption among the major automotive DRAM applications, due to the computing demand of basic media entertainment functionalities in vehicles now However, most vehicles with these functionalities require only about 1-2GB (gigabytes) of DRAM, which is the current mainstream, since infotainment applications are still relatively basic As infotainment systems evolve towards higher image qualities and higher video bitrates, solutions requiring 4GB in DRAM content are also under development, with high-end systems transitioning to 8GB in DRAM content On the other hand, given the close viewing distance involved in automotive infotainment, video bitrates must be sufficiently high to minimize lag DRAM specifications for infotainment applications are therefore gradually shifting from DDR3 2/4Gb (gigabits) to LPDDR4 8Gb in order to satisfy the high data transfer speed and bandwidth required to achieve a sufficiently high video bitrate and optimal viewing experience
With regards to ADAS, development is currently divided into two architectures: centralized vs decentralized (or distributed) systems Decentralized systems include such devices as reverse parking sensors, which require about 2/4Gb of DRAM Centralized systems, however, require 2/4GB of DRAM, since data collected from various sensors located throughout the vehicle are transferred to and computed in a central control unit in centralized ADAS Most vehicles with autonomous driving capabilities currently available on the market are still equipped with ADAS levels 1-2 and therefore require relatively low DRAM content Going forward, as the development of autonomous driving technologies moves to level 3 and beyond, along with the potential inclusion of AI functionalities, vehicles will need to be able to integrate and process enormous amounts of data collected from sensors in real-time, as well as perform immediate decision-making with the collected data Given the high bandwidth required for such operations, there will be a corresponding increase in automotive demand for higher-spec DRAM as well, and automotive DRAM for ADAS applications is expected to transition from DDR3 to LPDDR4/4X and even LPDDR5 or GDDR5/HBM later on, though this transition will require more time before it can take place, due to existing regulations
The mainstream memory products used for telematics, or automotive communication systems, are MCP (Multi Chip Package) solutions Due to the frequency and compatibility requirements of baseband processors contained in these systems, all telematics applications require the use of LPDRAM As V2V and V2X gradually become necessities in the auto industry, automakers will place a high importance on memory bandwidth, meaning automotive DRAM for telematics will gradually shift from mainstream LPDDR2 solutions to LPDDR4/LPDDR5 Even so, the growth of telematics will depend on the pace of global 5G infrastructure build-out, since telematics requires 5G networks for fast peer-to-peer connections As for D-clusters, DRAM bit consumption per vehicle for this application category comes to either 2Gb or 4Gb, depending on the individual vehicle’s degree of digitization for its instrumental panel However, DRAM consumption for D-clusters is not expected to undergo significant future growths, and D-clusters may potentially be merged with infotainment into a single centralized system 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
