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2023/05/25
TrendForce reports a dramatic 212% QoQ decline in Q1 revenues for the DRAM industry, bringing total revenue down to US$9663 billion This significant dip represents the third consecutive quarter where revenues have fallen A closer look reveals that increased shipment volumes were exclusive to Micron, with other suppliers noting a decrease The ASP fell for all three major suppliers An enduring oversupply issue, which has led to an ongoing slump in prices, is the chief culprit behind the decline Nevertheless, the industry expects a gradual slowing in the rate of price decline following planned production cuts TrendForce’s Q2 forecast suggests a rise in shipments, but the ongoing price fall might limit potential revenue growth
Each of the three major suppliers—Samsung, Micron, and SK hynix—reported a drop in quarterly revenue Samsung saw a decline in both shipment volumes and ASP due to fewer orders for its newly launched devices, resulting in a QoQ decrease in revenue of 247%, amounting to about US$417 billion Benefiting from its earlier financial reporting and the tail-end orders of the previous year, Micron climbed to the second position in 1Q23 Despite being the only supplier among the big three to record positive shipment growth, Micron couldn't avoid a minor 38% revenue decline, taking its total down to US$272 billion SK hynix faced the steepest decline, with more than a 15% drop in both shipment volume and ASP, leading to a drastic 317% plunge in revenue, amounting to approximately USD$231 billion
TrendForce's earlier prediction of the big three shifting from profitability to loss in 1Q23 due to a swift ASP decline came true With DRAM prices continuing to fall, it's anticipated that Q2 operating profit margins will remain in the red In response to this, all three major suppliers have started implementing production cuts, with Q2 capacity utilization rates expected to fall to 77% for Samsung, 74% for Micron, and 82% for SK hynix
In terms of Taiwanese suppliers, Nanya faced a decline in shipments for the fourth consecutive quarter, with Q1 revenues dropping by 167% Mainstream process nodes remained stagnant at 20 nm, lagging behind the big three, leading to a substantial decline in operating profit margins to -449% However, there is a glimmer of hope as the replenishment demand for TV SoC inventory is anticipated to lift the Q2 utilization rate back up to 80% from 70% Despite receiving several emergency orders for laptops and TVs in Q1, Winbond reported an 88% decline in revenues as prices continued to fall Amidst falling prices and sluggish demand, PSMC experienced a 123% dip in its quarterly DRAM revenue The company's financial performance is primarily tied to its own consumer DRAM products, excluding the revenue from its DRAM foundry services However, if the foundry service revenue were to be included, the company's quarterly decline would steepen to 226%
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/
2023/05/04
Last October, the US Department of Commerce imposed semiconductor restrictions on Chinese imports of equipment for processes of 18nm and below SK hynix’s Wuxi fab was granted a one-year production license, but geopolitical risks and weak demand prompted the company to reduce wafer starts by about 30% per month in 2Q23, according to TrendForce's latest research
TrendForce reports that SK hynix had planned to transition its Wuxi fab’s mainstream process from 1Y nm to 1Z nm, decreasing the output of legacy processes However, due to limitations imposed by the US ban, the company instead opted to increase the share of its 21 nm production lines, focus-ing on DDR3 and DDR4 4Gb products SK hynix’s long-term strategy involves shifting its capacity expansion back to South Korea, while the Wuxi fab caters to domestic demand in China and the legacy-process consumer DRAM market
DDR3 and DDR4 4Gb chips account for less than 30% of SK hynix’s overall consumer DRAM shipments However, the company is extending its legacy production lines, which means the supply of low-density consumer DRAM will gradually increase An analysis of the Taiwanese supply chain reveals Nanya, Winbond, and PSMC (which assist IC design houses with DRAM production) all supply DDR3 4Gb; only Nanya provides large-scale shipments of DDR4 4Gb The three main suppliers and Nanya have process nodes of around 20 nm for DDR3 4Gb Samsung currently supplies both 20 nm and 1X nm process nodes for DDR4 4Gb and plans to transition to 1Z nm in the second half of 2023, taking the lead in the process structure Micron, however, does not provide this particular chip density, while both SK hynix and Nanya are around 20 nm In general, other Taiwanese manufacturers primarily focus on DDR3 products, and their product nodes remain at 25 nm Although Winbond and PSMC are developing 20 nm processes, they continue to lag behind their competitors when it comes to mass production
Demand for consumer DRAM remains unstable, and prices are expected to continue declining throughout 2Q23
Despite a slight uptick in demand due to earlier TV inventory digestion, which led to a modest increase in SoC orders, the market continues to face challenges Automotive demand has been relatively stable, but the market size is still limited, and the visibility of network communication demand remains low TrendForce asserts that although DRAM suppliers have cut back on consumer DRAM production, the current state of supply and de-mand is still leaning towards an oversupply when considering inventory levels Consequently, 2Q23 should see an average price drop of 10–15% In the long run, increased output from the Wuxi fab could put additional pressure on suppliers, making it even more difficult for consumer DRAM prices to rebound
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/
2023/04/14
TrendForce reports that the US Department of Commerce recently released details regarding its CHIPS and Science Act, which stipulates that beneficiaries of the act will be restricted in their investment activities—for more advanced and mature processes—in China, North Korea, Iran, and Russia for the next ten years The scope of restrictions in this updated legislation will be far more extensive than the previous export ban, further reducing the willingness of multinational semiconductor companies to invest in China for the next decade
CHIPS Act will mainly impact TSMC; and as the decoupling of the supply chain continues, VIS and PSMC capture orders rerouted from Chinese foundries
In recent years, the US has banned semiconductor exports and passed the CHIPS Act, all to ensure supply chains decoupling from China Initially, bans on exports were primarily focused on non-planar transistor architecture (16/14nm and more advanced processes) However, Japan and the Netherlands have also announced that they intend to join the sanctions, which means key DUV immersion systems, used for producing both sub-16nm and 40/28nm mature processes, are likely to be included within the scope of the ban as well These developments, in conjunction with the CHIPS Act, mean that the expansion of both Chinese foundries and multinational foundries in China will be suppressed to varying degrees—regardless of whether they are advanced or mature processes
TrendForce points out that since 1H23, there is a trend occurring where IC design companies are shifting existing and new orders to Taiwanese foundries under pressure from clients as well as their own need to minimize risks Tier-2 and -3 companies such as VIS and PSMC, which mainly focus on mature processes, have benefited greatly TrendForce believes that this shift in orders will undoubtedly ensure major recovery for foundries currently impacted by inventory adjustment and low capacity utilization rates, especially from 2H23 until 2024
TrendForce points that TSMC has been the most affected by this updated legislation, mostly due to their plans to expand into both China and the US TSMC’s current expansion into China, which began in 2022, has been focused on 28nm processes at Fab 16 The company has been continuously moving expansion-related equipment into China, and in October 2022, it obtained a one-year import permit The expansion is scheduled to be completed by mid-2023 However, based on the new CHIPS Act, TSMC’s further expansions for 16/12nm and 28/22nm processes at Fab 16 are limited for the next decade upon receiving the US subsidies Furthermore, 85% of the output must meet local market demand in China US export regulations require multinational foundries to apply for equipment import permits, which will reduce TSMC’s willingness to continue investing in China
Plans to expand memory production will focus on South Korea and the US, and China’s share of global DRAM capacity will decline YoY
The new CHIPS Act mainly applies to processes more advanced than 18nm, which is equivalent to 1Xnm for major suppliers However, mainstream DRAM processes have already been upgraded to above 1Znm, and customers are gradually transitioning under encouragement from suppliers; only a small portion of consumer DRAM products continue to remain below 1Xnm However, consumer DRAM products only account for 8% of total capacity SK hynix is the only major supplier to have a fab in Wuxi, China, but factors such as oversupply and geopolitics have caused DRAM output at the Wuxi fab to drop four percentage points from 48% to 44%, and their new fab is set to be located in South Korea Meanwhile, Samsung and Micron have no DRAM capacity in China and their plans for future expansion will focus on South Korea and the US, respectively TrendForce estimates, based on the plans of these three suppliers, that South Korea’s share of global DRAM capacity will continue to rise while China’s will decline YoY, dropping from 14% to 12% by 2025
When it comes to the supply of NAND Flash, the US has stated that restrictions on expansion mainly apply to processes with fewer than 128 layers Samsung’s Xi’an fab continues to focus on 128-layer processes and accounts for approximately 17% of global NAND Flash capacity; the Intel fab in Dalian, which was acquired by SK hynix, accounts for 9% of global NAND Flash capacity However, Samsung and SK Hynix are unlikely to expand their old production lines as 128-layer products will clearly be unable to compete with more advanced ones The plans involving upgrading process technology and raising production capacity at manufacturing operations in China will be severely limited All in all, China’s share of global NAND Flash capacity is expected to drop from 31% to 18% by 2025
Demand for DRAM and NAND Flash are in the same boat; many US companies have begun restricting production regions for memory and storage products or are requiring foundries to move their production facilities out of China to avoid geopolitical conflicts TrendForce predicts the formation of two distinctive production regions: Chinese factories that primarily focus on meeting domestic demand, and factories outside China that will serve other markets
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/
2023/03/28
TrendForce reports that several suppliers, such as Micron and SK hynix, have started scaling back DRAM production The ASP of DRAM plunged 20% in 1Q23, and this price decline is predicted to slow down to 10~15% next quarter It’s uncertain whether or not demand will recover in 2H23 Therefore, the ASP of DRAM has continued to fall as inventory levels are high from the suppliers’ side, and prices will only rebound if there is a significant decrease in production
PC DRAM: Purchase quantity from buyers has fallen drastically over the past three quarters; buyers have around 9~13 weeks of PC DRAM stock remaining Despite suppliers having already cut production in the PC DRAM segment, DDR4 8 GB module is still likely to fall by more than 10% in 2Q23 There is a possibility that PC OEMs may purchase more DRAM because prices have been down to a relatively low level, but it is still under observation whether or not this can mitigate the inventory overstock situation from the suppliers’ side TrendForce predicts the ASP of PC DRAM will fall between 10~15%
Server DRAM: Demand for server DRAM from OEMs and cloud service providers has been sluggish due to inventory adjustments In addition, consumer demand looks less than promising, prompting suppliers to increase the ratio of server DRAMs in their product mixes However, this resulted in a massive inventory pile-up during 1Q23 While most suppliers have lowered their capacity utilization rates, their efforts have yet to make a noticeable impact on declining prices TrendForce predicts that the ASP of server DRAM will fall 13~18% in 2Q23
Mobile DRAM: The DRAM inventories of smartphone brands have returned to a relatively healthy level However, these brands have mostly adopted a conservative plan of action for smartphone production, which means that buyer demand for mobile DRAM will be constrained in 2Q23 As a result, suppliers are under a great deal of pressure to sell off as much stock as possible Even with cutbacks being made in mobile DRAM production, reversing their current overstock will continue to be a challenge for these companies TrendForce predicts the ASP of mobile DRAM to continue falling as we move into 2Q23 Nevertheless, there is a possibility that the decline will shrink to 10~15%
Graphics DRAM: Buyers have been stocking up on graphics DRAM rather conservatively, while even AI has failed to make a considerable impact on demand Taking a mainstream product, the GDDR6 16 Gb, for example, TrendForce predicts ASP will fall 10~15% QoQ in 2Q23 due to constrained demand The DRAM industry is currently in the midst of transitioning from 8 to 16 Gb; Samsung’s GDDR6 8 Gb will reach its EOL at the end of the year Beginning 2024, SK hynix will be the only company still offering 8 Gb products Rolling back production could finally present an opportunity for the price of GDDR6 8 Gb to stop fluctuating aggressively
Consumer DRAM: Demand for networking devices has been relatively stable However, buyers have dialed back their procurement activities as of late given that existing orders have been completed These buyers appear to have conservative estimations of the growth potential of network-related demand this year, and the application market, which includes television, will be unable to support demand for the consumer DRAM market Supply continues to outpace demand even as suppliers reduce their production considerably TrendForce predicts that the ASP of consumer DRAM will fall 10~15% in 2Q23
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/
2023/03/02
According to TrendForce’s research, global DRAM revenue fell by 325% QoQ to US$12, 281 million for 4Q22 The QoQ decline for 4Q22 is larger than the QoQ decline of 288% for 3Q22 and comes close to the QoQ decline of 36% for the final quarter of 2008, when the global economy was in the midst of a major financial crisis The main cause of the steep revenue drop in 4Q22 was the plummeting overall ASP DRAM suppliers experienced a rapid accumulation of inventory in 3Q22 due to a freeze in buyers’ demand Subsequently, suppliers were much more energetic in price negotiations for 4Q22 contracts as they were struggling for market share Among the major categories of DRAM products, server DRAM suffered the sharpest price drop in 4Q22 Contract prices of DDR4 and DDR5 server DRAM products registered QoQ drops of 23~28% and 30~35% respectively
The top three DRAM suppliers Samsung, SK hynix, and Micron all posted a significant QoQ drop in revenue for 4Q22 Samsung was the most aggressive in the price competition during the quarter, so it was able to raise shipments despite the general demand slump Samsung’s DRAM revenue came to US$5,540 million with a QoQ decline of 251% Even with this result, Samsung had the smallest revenue drop among the top three SK hynix posted a QoQ drop of 352% in DRAM revenue to reach around US$3,398 million On the whole, the two South Korean suppliers ramped up shipments because 4Q22 was the final quarter of the 2022 fiscal year for them However, the large price concessions that allowed for more shipments also caused their respective ASPs to plunge This, in turn, was reflected in their revenue declines
Turning to Micron, its DRAM revenue fell by 412% QoQ to reach around US$2,829 million Micron’s fiscal quarters do not align with calendar quarters and end earlier compared with other suppliers’ fiscal quarters Therefore, Micron recorded a larger drop in shipments and thereby suffered the largest revenue decline among suppliers Regarding profitability, DRAM suppliers on the whole experienced a massive contraction in operating margin in 4Q22, so they are expected to turn from profit to loss for 1Q23
Regarding the top three suppliers’ plans for developing production capacity in 2023, Samsung is going to optimize the legacy production lines of Line 15, so this fab will experience a marginal drop in DRAM wafer input The newly built P3L, which is the focus of Samsung’s capacity expansion efforts, has begun pilot production in 1Q23 and will be mainly responsible for driving the growth of the supplier’s total DRAM wafer input for this year SK hynix announced in 4Q22 that it will be cutting production, so its DRAM capacity utilization rate is projected to slid from 92% in 1Q23 to 82% in 2Q23 Among SK hynix’s fab sites, the base in the Chinese city of Wuxi will be making the largest production cut Conversely, SK hynix maintains its plan to slightly raise production at M16 in South Korea because this fab deploys its advanced DRAM manufacturing process As for Micron, it is scaling back production at OMT (its operation in Taiwan) and the Hiroshima base simultaneously Micron’s DRAM capacity utilization rate has fallen to 84% and is expected to stay at this level through 2023 On the technology front, Micron has begun mass production with its latest 1beta nm process OMT will also deploy the 1beta nm process within 2023, with wafer input scheduled for the middle of the year and mass production taking place during the second half of the year
With regard to Taiwan-based DRAM suppliers, Nanya posted a QoQ drop of 30% in revenue for 4Q22 Even though Nanya experienced a marginal drop in shipments, its revenue was significantly impacted by the plummeting contract prices Nanya is currently staying with the 20nm process as its main DRAM manufacturing technology, and the output contribution from its 1A nm process has been relatively small Also, Nanya began cutting production in 4Q22 as its operating margin had already arrived at -19% Its DRAM capacity utilization rate has dipped to around 70% PSMC posted a QoQ drop of around 395% in DRAM revenue for 4Q22 It should be noted that PSMC’s DRAM revenue only encompasses the sales of its own branded and in-house manufactured DRAM products The calculation excludes DRAM foundry PSMC’s customers in the consumer DRAM segment are still focusing in inventory reduction, so the demand from them has yet to pick up If DRAM foundry is included in the calculation, PMSC’s QoQ decline came to 274% Lastly, turning to Winbond, the share of known good dies (KGDs) in its DRAM shipments has been fairly large Therefore, its shipments kept sliding during 2H22 as its clients were adjusting their inventories For 4Q22, Winbond’s DRAM revenue fell by 303% QoQ Looking at Winbond’s fab sites, Fab6 in Taichung currently maintains a capacity utilization rate of around 50%, while fab KH in Kaohsiung has entered the pilot production phase In the aspect of manufacturing technology, KH now deploys the 25S nm process, but the supplier also plans to have its 20nm process ready for wafer input in the middle of this year
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/
