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2020/09/03
The global spread of the COVID-19 pandemic has resulted in WFH and distance education becoming the new tenets of everyday life, according to TrendForce’s latest investigations The resultant booming stay-at-home economy has not only galvanized an explosive double-digit growth for NB (notebook computer) shipment this year, but also benefitted the graphics card market, whose remarkable shipment performance that began in 2Q20 is expected to persist in 2H20
The highlights for the graphics card industry this year consist of NVIDIA’s recently announced Ampere cards and AMD’s Big Navi, which will be released in 4Q20 Graphics card manufacturers have obtained the new reference graphics cards from NVIDIA, and they are currently implementing verification and testing If manufacturers can complete these processes and release the cards to the market on schedule, the positive outlook of the graphics card market will likely continue throughout 4Q20 In terms of graphics DRAM, the new cards are equipped with more content per box (DRAM capacity) compared with the previous generation The simultaneous increase in shipment quantity and content per box will potentially stop the price drop for graphics DRAM ahead of other DRAM products
GDDR5 prices may enter into an upswing against the overall decrease in DRAM prices in 4Q20, while the decline in GDDR6 prices is expected to narrow
Looking at the supply side of the graphics DRAM market, the three dominant suppliers Samsung, SK Hynix, and Micron are accelerating their efforts to shift production capacity from GDDR5 to GDDR6 this year In addition, GDDR6 will account for more than 60% of total graphics DRAM bit output, officially surpassing GDDR5 Regarding the demand side, some of NVIDIA’s current-gen graphics cards based on the Turing architecture which are equipped with GDDR5 have occupied the majority of graphics card sales in the past two quarters The lowered production capacity and high demand have thus resulted in a tight supply situation for GDDR5 On the other hand, spot prices of GDDR5 8Gb chips are 10% higher compared to 3Q20 contract prices Therefore, the supply of GDDR5 is expected to remain tight throughout the transition period prior to the increased production and shipment of the new NVIDIA Ampere graphics cards, while GDDR5 contract prices are highly likely to enter an upsurge ahead of other DRAM products
Demand is expected to take off for GDDR6 thanks to its deployment in the upcoming game consoles (ie Xbox Series X and PS5) Furthermore, GDDR6 has been adopted for new products across all price segments of the graphics card market The demand for the next-generation series is going to keep rising as the current period of product transition is coming to an end The supply of GDDR6 products is not as tight as before because DRAM suppliers are gradually reallocating their production capacity for graphics DRAM to GDDR6 products In spot trading, the average transaction price of GDDR6 8Gb chips now stands around the same level as the average contract price of the same product for 3Q20 Due to the lack of a noticeable difference with spot prices, contract prices of GDDR6 products are projected to stabilize and will unlikely experience another double-digit QoQ decline in 4Q20
It is worth pointing out that graphics DRAM constitutes a more demand-sensitive segment of the whole DRAM market The price trend of graphics DRAM products can therefore deviate from the price trends of the other major categories of DRAM products because it fluctuates much more dramatically when demand changes TrendForce also has to emphasize that graphics DRAM accounts for just 6% of the overall DRAM bit consumption Moreover, the manufacturing of graphics DRAM products does not allow interchangeability of products on the frontend (or wafer) production process In contrast, the frontend production process for commodity DRAM (including PC DRAM, server DRAM, and specialty/consumer DRAM) can produce different types of standard memory chips Hence, shifts in the price trend of graphics DRAM products should not be regarded as an indicator of the state of the DRAM industry
2020/09/02
Spot prices have risen for certain types of memory chips recently, leading to significant market speculations on whether the entire memory industry could see a turnaround in the near future
TrendForce’s current observations of the DRAM market indicate that consumer DRAM accounts for only 8% of the overall DRAM market’s bit consumption As such, even though consumer DRAM prices have been fluctuating, movements in contract prices of DRAM products will generally be dictated by changes in the inventory levels of suppliers and buyers and by the recovery of purchasing momentum for mainstream server DRAMs DRAM prices will be under downward pressure until data centers and buyers of enterprise servers restart their inventory-building procurement Hence, the recent rebound in spot prices is likely a mere temporary phenomenon
Consumer DRAM has the strongest demand momentum as its QoQ decline in 4Q20 is expected to narrow down to within 5%
Driven by expanded sanctions from the US, Huawei has recently intensified its procurement for DRAM products in anticipation of potential shortages after the grace period deadline Under these circumstances, *16 chips that are mainstream in the consumer DRAM segment are going to be very much sought after because of the demand coming from 5G infrastructure, networking devices, and other related end products TrendForce has therefore narrowed its forecasted QoQ decline in consumer DRAM prices for 4Q20 from the previous range of 10-15% to the current 0-5% As for mobile DRAM and server DRAM, although procurement activities for these product categories have risen to some degree, this increased procurement is inadequate to change their current oversupply situations
On the other hand, in spite of the marginal recovery in the quantity of NAND Flash spot trading transactions because some countries have begun to ease the emergency measures for containing the spread of the COVID-19 pandemic, TrendForce maintains that the NAND Flash market as a whole will remain fairly weak over the long term A price rally will unlikely happen in the near future, especially as the competition intensifies in the upstream part of the NAND Flash supply chain
2020/08/26
The massive drop-off in DRAM quotes in 2019 culminated in a total yearly decline of more than 50%, which led to revenue losses for most module makers in 2019, according to TrendForce’s latest investigations However, Kingston’s growth against the downtrend served as the saving grace for the module industry, which registered yearly revenue of US$161 billion in 2019, a mere 3% decrease YoY
According to TrendForce, an analysis of 2019 price trends shows that the rapid decline of DRAM prices in 1H19 took place because DRAM inventory levels on both the client side and the supply side had reached a relative peak by the end of 2018, with the overall momentum of DRAM procurement gradually weakening, as first shown by server manufacturers Furthermore, the client side’s yearlong effort in inventory reduction resulted in a constant downward pressure on DRAM prices and frequent reports of price drops, in turn damaging the revenue performances of many module makers Even so, a few select module makers emerged from these dire circumstances and increased their revenues against the downtrend via developing new commercial opportunities
Kingston took the crown once again, with China-based POWEV surging to fourth place
TrendForce estimates that the top five module makers accounted for about 90% of industry revenue in 2019, while the top 10 accounted for 95% In particular, Kingston alone captured more than 80% market share, thanks to a newly developed business model last year which involved a supply chain optimization service provided by Kingston to its major international OEM clients This service allowed Kingston’s clients to ship a more versatile product offering and do so on a more flexible schedule Kingston’s DRAM module revenue grew despite the overall decrease in DRAM quotes The company topped the list of module makers again by scoring an 8% revenue increase YoY
On the other hand, the nosedive of DRAM prices in 2019 was considerably more detrimental for major Chinese module maker Ramaxel, whose revenue fell by almost 40% Smart Modular Technologies, the runner-up in 2018, also saw its revenue fall by nearly 50%, thus swapping its position on the revenue ranking list with Ramaxel in 2019 Shenzhen-based POWEV obtained a new batch of orders from Chinese clients in 2019, ensuring that its shipment growth was able to resist the downward pressure on quote levels and driving its revenue to an 85% increase YoY As such, POWEV leapfrogged to fourth place on the list
Taiwan-based ADATA was similarly affected by the bearish DRAM market due to its high allocation of PC DRAM products ADATA’s revenue decreased by 43% YoY, and its rank fell to fifth place ADATA is currently looking to lower its allocation of PC DRAM and raise its overall profitability by expanding its business in emerging sectors, including gaming, industrial automation, and automotive applications Shenzhen-based DRAM module veteran tigo, ranked sixth on the list, saw improvements in both shipment volume and ASP via its business transformation from B2C to B2B in 2019, during which it posted a mere 46% YoY decrease in DRAM revenue Also worth mentioning is the fact that tigo’s revenue from its NAND Flash business consistently scored YoY growths, in turn contributing to the upward momentum of tigo’s overall revenue
Team Group expanded its reach in both gaming and e-commerce, while Transcend continued its business transformation despite a minor decline in revenue
In addition to its continued expansion in the global e-commerce industry, Team Group’s increased efforts in the gaming sector, combined with its aggressive marketing and promotional efforts, led to growths in sell-in performance and ASP Aided by the growing demand from gaming and e-commerce, Team Group’s revenue grew by 63% YoY, moving its rank up from ninth to seventh place
Transcend’s revenue dropped by 25% YoY, while its rank fell to eighth place, as the company struggled to deal with falling quotes and its ongoing business transformation Transcend’s strategy in response to fluctuations in the memory market remained focused on industrial automation projects, which yielded relatively higher gross profits, and strategic products Transcend aimed to improve its competitiveness through strengthening its distribution channels and industrial automation businesses
As Apacer proactively focused on specialty products for industrial automation and automotive markets, Innodisk excelled against the industry-wide decline thanks to its rock-solid core competency
In spite of the relatively large declines in revenue from its DRAM business, ninth-ranked Apacer recorded a YoY growth in overall profit in 2019, as its core business gradually shifted towards specialty products for industrial automation, medical, and automotive markets By shifting its focus to specialty memories, which are products with higher gross profits, Apacer’s PC DRAM offerings accounted for less than half of its overall memory revenue last year This realignment of core business is expected to stabilize Apacer’s profit structure going forward
Tenth-ranked Innodisk made its appearance in the top 10 for two years in a row, registering an 18% decline in DRAM revenue in 2019 In addition to undergoing a narrower DRAM revenue decline compared to the rest of the industry, Innodisk’s overall profitability grew against the downtrend, reflecting the long-term stability of its core competency in industrial automation products, which have relatively high ASP Innodisk will continue to develop memory products for industrial automation, servers, and medical applications in the future, on top of seizing the diverse commercial opportunities from the rise of AI technologies
2020/08/19
The last cyclical upturn in DRAM contract prices began at the start of 2020 and was led by server DRAM, according to TrendForce’s latest investigations In 2Q20, the emergence of the COVID-19 pandemic shocked the global economy, but OEMs maintained or even stepped up procurement of components because they feared disruptions in the supply chain As a result, DRAM suppliers’ bit shipments surpassed expectations for the quarter, in turn widening the overall increase in DRAM ASP and raising the global DRAM revenue by 154% QoQ in 2Q20 to US$171 billion
Nevertheless, TrendForce indicates that server OEMs are now carrying a rather high level of DRAM inventory after aggressively stocking up for two consecutive quarters At the same time, customers of enterprise servers are holding back on procurement because the economic outlook is getting bleaker and more uncertain Since server DRAM has the unique role of leading cyclical changes, this category is going to be first to experience price drop in the next downturn and thereby pull prices down for other types of DRAM products As such, TrendForce forecasts at best a flattening of product shipments and decrease in DRAM prices in 3Q20, with DRAM suppliers suffering a decline in profitability
Dominant suppliers saw growth in both revenue and profit in 2Q20 as increases in their ASPs widened
All three leading DRAM suppliers, including Samsung, SK Hynix, and Micron, posted strong revenue results for 2Q20, while their respective market shares remained largely unchanged The DRAM market saw an increase in both prices and bit shipments, leading to a double-digit rise in revenue for the three suppliers On the other hand, the collective market share of suppliers outside the group of the top three came to just 5% Regarding the three leading suppliers’ revenue performances in 3Q20, TrendForce believes that Micron may be able to slightly raise its market share because it will adopt a more aggressive pricing policy in order to reach the targets for its fiscal year However, the existing oligopoly in the DRAM market is expected to remain as is without undergoing any significant changes
On the matter of profitability, all three leading suppliers posted an increase in their operating margins in 2Q20 as the overall ASP rose by around 10% (it should be noted that there are discrepancies in calculation of the leading suppliers’ performances since the suppliers have different product mixes as well as different start and end dates for fiscal quarters) Samsung’s operating margin surpassed the 40% threshold in 2Q20, reaching 41% from 32% in 1Q20 SK Hynix’s operating margin grew to 35% in 2Q20 SK Hynix’s ASP rose sharply in 2Q20 because server DRAM comprises a large share of its product mix This, in turn, led to the considerable growth in its operating margin As for Micron, its operating margin came to 21% for its fiscal quarter from March to May, up from 16% in its previous fiscal quarter Micron had the smallest increase in ASP among the top three suppliers, so the gain in its operating margin was relatively modest as well Looking ahead to 3Q20, the leading suppliers are expected to struggle with profitability Although they have been optimizing their cost structures, their progress in this area will unlikely be sufficient to compensate for the decline in their ASPs
Suppliers remain cautious in capacity planning as the COVID-19 pandemic continues to affect demand visibility
Regarding the leading suppliers’ technology plans, Samsung kept transferring the wafer capacity of Line 13 away from DRAM and toward CMOS image sensors in 2Q20 At the same time, Samsung was preparing for the activation of P2L in the Pyeongtaek campus This fab will begin DRAM production in 2H20 to compensate for the production cut at Line 13 On the technology front, Samsung is raising the share of the 1Znm production in its output SK Hynix reallocated more of the wafer capacity of M10 from DRAM to CMOS image sensors in 2Q20 It also raised DRAM output from M14 Moving into 2H20, SK Hynix will increase the production capacity of the Wuxi base by a modest amount The growth in its annual total bit output will be primarily driven by the 1Ynm migration
Micron’s main focus this year is on achieving mass production and raising output share for the 1Znm process Currently, Micron has advanced its 1Znm products to the early part of mass production with a few OEMs still testing samples Once sample testing is fully completed, Micron is expected to make the 1Znm process its main technology for DRAM production As for capacity planning, Micron’s total DRAM production capacity at the end of 2020 will be relatively the same as at the end of 2019 On the whole, the three leading suppliers have taken a more conservative approach to capacity expansion for the rest of this year since the COVID-19 pandemic continues to sap demand TrendForce currently estimates that 70% of the increase in the DRAM industry’s annual total bit output for 2021 will be attributed to the 1Ynm and 1Znm migrations, whereas capacity expansions will account for only 30%
Taiwanese suppliers saw an increase in both prices and bit shipments as they continue to focus on advanced process technology development and product improvements
Nanya Tech posted a QoQ rise of around 7% for both its ASP and bit shipments As a result, its revenue grew by 15% QoQ in 2Q20 Nanya’s operating margin went up further on the back of the rising ASP, climbing to 196% in 2Q20 The hike in Winbond’s DRAM ASP in 2Q20 was limited to 05% because a significant portion of the suppliers’ sales is realized through long-term contracts In contrast to its DRAM products, however, Winbond’s revenue from Flash products registered a notable growth for 2Q20 As for Powerchip, the calculation of its revenue in this press release covers only the sales of the company’s own branded, in-house manufactured PC DRAM products Powerchip’s strategy of focusing on foundry orders for logic products such as PMICs (power management IC) and Driver ICs continued to constrain its DRAM production Hence, its DRAM revenue for 2Q20 was generally on par with 1Q20
Despite their varying revenue performances for 2Q20, the three Taiwanese suppliers will be concentrating on their next-generation processes Nanya is working to have its 1Anm and 1Bnm processes enter pilot run as soon as possible Winbond is raising the yield rate of its new 25nm process, but its capacity expansion is mainly for raising Flash production Lastly, Powerchip continues to improve the manufacturing of its 25nm DDR4 chips Nevertheless, foundry orders for logic products remain the core part of its operational strategy
