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2022/11/22
Based on the latest data and research, TrendForce has further corrected down the projected YoY growth rate of whole server shipments for 2023 to 28% Three factors are behind this revision First, lead time has started to return to its usual length for most orders related to server components from 3Q23 onward Seeing this, server OEMs and cloud service providers (CSPs) have also begun to correct the component mismatch issue by lowering demand for items that are in excess while maintaining a constant inventory level for items that are still in tight supply This development, in turn, has reduced the flow of server orders going to ODMs Second, the wave of demand that was generated earlier from the effects of the COVID-19 pandemic is dissipating Hence, expansion activities have cooled off noticeably for services such as video streaming, e-commerce, etc Among CSPs, Meta, Google, and ByteDance (TikTok) have lowered their server procurement quantities for next year Lastly, the global economic outlook has remained fairly negative, so companies across most industry sectors have formulated a more conservative expenditure plan and scaled back IT-related spending for next year
QoQ Declines in Prices of Server DRAM Modules and Enterprise SSDs for 4Q22 Have Widened to 23~28% as Competition Among Suppliers Intensifies
In the server DRAM market, DRAM suppliers are facing greater difficulties in raising sales because buyers have been carrying a high level of inventory during the second half of this year In 3Q22, suppliers did manage to get some buyers to lock in the price for that quarter and the next However, TrendForce believes that further downward corrections to next year’s server shipments have ratcheted up the price competition among suppliers Moving into October, CSPs received even lower server DRAM quotes as suppliers proposed to lock in the price to the end of 1H23 Now, in November, another round of negotiations for “fourth-quarter special deals” has also commenced Due to these developments, QoQ declines in contract prices of server DRAM modules for 4Q22 have enlarged to 23~28%
Regarding the enterprise SSD market, orders remained relatively stable for a while However, the increasingly conservative economic outlook and the downward revisions to corporate capital expenditure plans in 2H22 have led to softer demand momentum for enterprise SSDs Moreover, NAND Flash suppliers face rising inventory for enterprise SSDs as the demand for consumer electronics has plummeted Internally, they have been under pressure to find solutions for consuming excess production capacity and meeting their year-end targets Externally, they need to prepare for headwinds such the expected weak demand situation during the low season of 1Q23 and delays in the production ramp-up of Intel’s and AMD’s new server CPU platforms Given these factors, suppliers are compelled to offer larger price concessions on enterprise SSDs even though the contracts for this fourth quarter have already been arranged Due to the new wave of negotiation activities, QoQ declines in contract prices of enterprise SSDs have exceeded the earlier estimation and now come to 23~28% as well
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/
2022/10/18
According to the latest TrendForce research, pandemic-induced materials shortages abated in the second half of this year and the supply and delivery of short-term materials has recovered significantly However, assuming materials supply is secure and demand can be met, the annual growth rate of server shipments in 2023 is estimated to be only 37%, which is lower than 51% in 2022
TrendForce indicates that this growth slowdown is due to three factors First, once material mismatch issues had eased, buyers began adjusting previously placed purchase order overruns Thus, ODM orders also decreased but this will not affect the 2022 shipment volume of whole servers for the time being Second, due to the impact of rising inflation and weakness in the overall economy, corporate capital investment may trend more conservative and IT-related investment will emphasize flexibility, such as the replacement of certain server terminals with cloud services Third, geopolitical changes will drive the continuing emergence of demand for small-scale data centers and previous construction of hyperscale data centers will slow The recent ban on military/HPC servers issued by the US Department of Commerce on October 7 has a very low market share in terms of its application category, so the impact on the overall server market is limited at present However, if the scope of the ban is expanded further in the future, it will herald a more significant slowdown risk for China's server shipment momentum in 2023
From the perspective of whole device server DRAM content, since buyers will introduce new CPUs, Intel Sapphire Rapids and AMD Genoa, in 2023 and the cost of DDR5 DRAM is 30~40% higher than that of DDR4, the combination of CPU, Memory, and relevant new server model components will increase costs significantly As server terminal demand considerations will focus more on hardware costs, average installed whole device DRAM content will be limited Therefore, average annual content of server DRAM in 2023 is estimated to increase by only 7%, which is the first time this figure has fallen below 10% since 2016
If server DRAM prices continue making sharp corrections, average installed content expected to grow further in 2023
However, it is still possible that average server DRAM content will increase to 12% in 2023 because, in terms of server DRAM pricing in 2022, the prices received by Tier 1 customers in 3Q22 fell past a record low and this downward price trend will continue in 2023 If manufacturers are also willing to issue a larger price discount for high-content 64GB modules, this will have an opportunity to stimulate an increase in buyer purchasing power This situation will prompt some server applications to increase installed whole device DRAM content with services exhibiting the greatest demand for DRAM such as video streaming, public cloud, and private cloud increasing their installed content of server DRAM
In terms of the average content of enterprise SSDs, as the 4Q22 price drop expands to 15-20% and easing oversupply in 2023 will remain difficult, quotations may continue to face corrections However, since the price of NAND Flash is more flexible than that of DRAM, price reduction will stimulate an increase in whole device installed content In addition, next-generation CPU platforms support PCIe 50 transmission and the manifold increase of transmission speed will also contribute to the growth of average installed content The annual growth rate of average enterprise SSD content is estimated to increase to 264% in 2023
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/
2022/10/11
According to TrendForce's latest server-related report, the original goal of CXL (Compute Express Link) was to integrate performance between various xPUs and thereby optimize hardware costs required for AI and HPC, breaking through original hardware limitations CXL support remains sourced to the CPU and, since the server CPUs that support CXL functionality such as Intel Sapphire Rapids and AMD Genoa only support the CXL 11 specification at this time, the product that this specification can realize first is CXL Memory Expander Therefore, TrendForce believes, among various CXL-related products, CXL Memory Expander will become a precursor product and this product is also the most closely related to DRAM
Assisted by CXL memory pooling functionality, AI and HPC expected to surmount hardware limitations and drive whole server DRAM consumption
However, CXL 11 is currently only practical as memory expansion in terms of DRAM and memory pooling will not be implemented until CXL 20 At this stage, average RDIMM usage of a dual-socket CPU server is approximately 10-12 units (maximum 16 units), meaning the number of RDIMM slots and channels are not being fully utilized Thus, general computing servers still have room to upgrade their original RDIMM in the short term and only applications that require AI and HPC will have CXL requirements According to TrendForce research, the consumption of CXL memory expanders has a limited impact on the overall DRAM market and CXL memory expanders are products created to optimize HPC performance in the short term
However, under existing applications, a portion of DRAM in whole servers will still idle and foster unused capacity during operation, leading to the data center industry paying for the cost of excess DRAM In the long run, the average DRAM capacity of whole servers will increase year by year as applications become more diverse and complicate However, if CXL memory pooling becomes practical in the future, internal xPU memory resources will be utilized effectively TrendForce believes that CXL memory pooling functionality will reduce the demand for RDIMM modules purchased by buyers, which will slow the growth rate of installed server DRAM capacity in individual servers in coming years
The CXL Consortium ultimately hopes to use this interface to effectively utilize the resources of every device, thereby breaking through AI and HPC hardware bottlenecks With the assistance of CXL, the development of AI and HPC will accelerate according to model complexity and contribute to the shipment volume of related models Therefore, from this perspective, CXL will drive the average capacity of DRAM at the whole server level (calculated as combined RDIMM and CXL memory expander) However, in terms of the annual growth rate of DRAM consumption on servers, growth will slow since CXL will efficiently use DRAM installed in whole devices
Buyers who will desire a substantial amount of CXL functionality are mainly focused on high-end computing machinery, so cloud service providers will be major adopters TrendForce has also observed that some OEMs ship models to their HPC computing customers requiring large-capacity DRAM expansion, which will also create potential adopters of this product
Montage, Marvell, Microchip revenue expected to ascend again due to the rise of CXL
At present, the CXL memory expander developed by manufacturers employs DDR5 but remains limited by the speed of the PCIe 50 interface at this stage and output speed is only marginally equivalent to DDR4 DDR5 will be able to realize its full speed after CPUs support PCIe 60 or higher specifications in the future From the perspective of CXL memory expander structure, a CXL controller is required in addition to DRAM CXL controller manufacturers include Montage, Marvell, Microchip, etc Therefore, the rise of CXL not only directly drives controller supplier revenue, but also does not rule out a self-development model similar to that of module houses or cloud service providers may appear in the future to produce CXL memory expanders after preparing controllers and DRAM
To sum up, the stagnation in current server performance is expected to be improved due to the development of CXL, which will effectively increase the usage of DRAM in servers while avoiding a spike in idling costs In the future, the CXL20 specification will reform the existing hardware bottleneck and, with the assistance of memory pooling, CXL will be able to exhibit greater advantages As applications become more diverse and complex, high-intensity operations such as HPC and AI will rely on xPU more than ever With shared memory pooling, model design can break free of hardware bottlenecks and continue to build more complex architectures In addition, the introduction of CXL will be popularized on the strength of future functions, especially in the large-scale introduction of cloud services into the industry This specification can better optimize communication between servers because CXL establishes high-speed communications interconnectivity and these interactions help to expand the application of computing power between parallel servers and optimizes the total cost of ownership (TCO)
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/
2022/08/03
According to TrendForce, DRAM market demand bit growth will only amount to 83% in 2023, sub-10% for the first time in history, and far lower than supply-side bit growth of approximately 141% Data indicates the DRAM market to be severely oversupplied at least in 2023 and prices may continue to decline NAND Flash is still in a state of oversupply and, although prices are expected to fall in the first half of next year, NAND Flash has built-in price elasticity compared to DRAM and average prices are expected to stimulate density growth in the enterprise SSD market after declining for several consecutive quarters Demand bits are expected to grow by 289%, while supply bits will grow by approximately 321%
From the perspective of various applications, rising inflation continues to impact demand in consumer markets, so the primary goal of memory brands has been to prioritize inventory correction Especially in the past two years, a shortage of upstream components caused by the pandemic led memory brands to overbook purchase orders while sluggish sales on the distribution channel side have resulted in slow depletion of current notebook inventory, resulting in a further weakening of notebook demand in 2023 In terms of PC DRAM, the proportion of DDR4 and LPDDR4X in PC applications will fall further while the penetration rate of LPDDR5 and DDR5 continues to rise However, the price premium of DDR5 will limit the growth of density in PCs DRAM density in PCs is estimate to increase by approximately 7% annually in 2023 If manufactures cut DDR5 pricing more aggressively next year, installed capacity may be driven up to 9%, depending on whether DDR5 price concessions can be effectively reconciled with DDR4
In terms of PC client SSDs, estimated average installed capacity only increased slightly by 11%, the lowest in the past three years The primary reason is that in the past two years, notebook shipments had spiked due to pandemic demand, simultaneously driving SSD installation rate Average capacity has readily driven up average capacity growth due to the previous tightening of SSD master IC supply However, notebook computer whole device costs have maintained an upward trend in the past two years due to the rising price of components, leading to branded PC manufacturers planning relatively conservative SSD capacity demand bits
Since server shipment forecasts have demonstrated impressive growth in past years, subsequent growth momentum will slow since computational fundamentals are already high In terms of Server DRAM, due to the advent of fifth generation memory specifications, the new Sapphire Rapids and Genoa platforms have increased the cost of whole devices and average server capacity has begun to encounter restrictions Instead of the prior practice of merely upgrading the capacity of a single module, demand side considerations will focus more on hardware costs and the practice of ESG strategies Average capacity increase of server DRAM is forecast to be limited in 2023, with an annual increase of approximately 7%
In terms of Enterprise SSD, the new Sapphire Rapids and Genoa platforms have begun to upgrade to support the PCIe 50 transfer standard in order to meet the needs of HPC and big data computing The capacity of SSDs must also be upgraded simultaneously to ensure PCIe 50 transfer performance This trend will contribute to the growth of the average capacity of enterprise SSDs next year In addition, as the overall NAND Flash oversupply continues into 1H23, a reduction in NAND Flash pricing will increase the shipment ratio of products above 4TB and the average annual growth rate of enterprise SSD capacity in 2023 is estimated to be 26%
As inflation rises, world economies are generally holding a pessimistic view of the consumer market TrendForce believes, cyclical replacement demand and new demand in emerging regions will lead to a slight increase in smartphone production In terms of Mobile DRAM, the Android camp currently has sufficient installed capacity to meet the needs of daily systems operation Therefore, barring impetus provided by innovative applications and considering the cost of whole devices and the low proportion of high-end sales, smartphone brands’ willingness to increase installed capacity has fallen accordingly In terms of the iOS camp, a high degree of operating system optimization reduces demand for mobile DRAM capacity Mobile DRAM density is estimated to increase by only 5% annually in 2023
In terms of smartphone NAND Flash, as the penetration rate of 5G smartphones gradually expands and applications require larger installed capacity to meet the needs of high-quality video recording, basic momentum can be seen for increasing NAND Flash density in smartphones At the same time, the iPhone product portfolio is still moving towards higher capacity across the board and high-end Android models have followed suit with 512GB as standard, while storage in mid- and low-end models will increase with subsequent upgrades in hardware specifications Thus, there is still room for growth in overall average capacity Annual growth of smartphone NAND Flash density is forecast to be maintained at 221% in 2023, slightly lower than that in 2022, but still at a high level
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/
The Webinar, ”COMPUFORUM 2022 Webinar: Diverse Market Opportunities Generated by Applications of Cyber-Physical Systems” will start from June 15, 2022 The TrendForce research team including Mark Liu, Caron Ju, Bryan Ao, and Alex Chen will present speeches regarding memory, servers, and datacenters, respectively
【Info】
When：Wednesday, June, 15
Where：COMPUFORUM 2022 Webinar (Free to access)
2022/07/04
According to the latest TrendForce research, despite the rapid weakening of overall consumer demand in 1H22, DRAM manufacturers previously presented a tough stance on price negotiations and gave little ground, steadily conveying inventory pressure from buyers to sellers Facing uncertain peak-season demand in 2H22, some DRAM suppliers have begun effectively expressing clear intentions to cut prices, especially in the server field, where demand is relatively stable, in order to reduce inventory pressure This situation will cause 3Q22 DRAM pricing to drop from the previous 3~8% to nearly 10% QoQ If a price war is incited due to companies competing for sales, the drop in prices may exceed 10%
PC OEMs have continuously downgraded their shipment prospects With average DRAM inventory levels at more than two months, unless a huge price incentive exists, there is no urgent demand for procurement At the same time, thanks to continuous adoption of the advanced 1Z/1alpha process, supply continued to increase in 3Q22 DDR4 output could not be effectively reduced due to high pricing limiting the penetration rate of DDR5 The price decline of PC DRAM in 3Q22 is revised to 5~10%
At present, server DRAM inventory clients have on hand is approximately 7 to 8 weeks and the buyers’ consensus is that the price of DRAM will continue to fall due to increased inventory pressure on sellers If manufacturers are willing to provide attractive quotations, buyers are willing to discuss the possibility of volume commitments As advanced manufacturing processes progress dynamically and terminal consumer products continue to weaken, server DRAM has become the only effective sales outlet Therefore, Korean manufacturers were the first to signal a willingness to discuss a quarterly pricing reduction of more than 5%, which expanded the decline of server DRAM to 5~10% in 3Q22
Smartphone production targets continued to be downgraded due to the sluggish economy In addition, smartphone brands are also pessimistic regarding future prospects, casting a gloom over their attitude towards materials stocking However, the output of mobile DRAM still increased in 3Q22 due to the adoption of advanced processes among several manufacturers, increasing pressure on suppliers This increases the willingness of sellers to offer price concessions Given the polarized disparity between supply and demand, the pricing decline of mobile DRAM is forecast to expand to 8-13% this quarter
Demand for graphics DRAM procurement has weakened due to inflation-related reduction in consumer products demand and a faltering cryptocurrency market At the same time, migrating graphics DRAM production capacity to other types of DRAM products in not as easy as migrating standard DRAM (Commodity DRAM) capacity Although demand has weakened, it is difficult for suppliers to quickly adjust output Therefore, they are also facing increasing inventory pressure Graphics DRAM pricing in 3Q22 is revised to decline 3-8% QoQ
TV shipments lead the fall and demand related to networking and industrial applications have also shown signs of weakening The price of DDR3 is currently at a relatively high point and there is plenty of room for pricing to fall in the future Weak stocking momentum originating from DDR4-related applications does not rule out the possibility of a wider decline In addition to the expansion of output due to the introduction of advanced processes, Chinese and Taiwanese manufacturers will still add new production capacity in 2H22 The decline in consumer DRAM pricing is forecast to deepen to 8~13% this quarter
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/
The Webinar, ”COMPUFORUM 2022 Webinar: Diverse Market Opportunities Generated by Applications of Cyber-Physical Systems” will start from June 15, 2022 The TrendForce research team including Mark Liu, Caron Ju, Bryan Ao, and Alex Chen will present speeches regarding memory, servers, and datacenters, respectively
【Info】
When：Wednesday, June, 15
Where：COMPUFORUM 2022 Webinar (Free to access)
