The ramp-up of the Intel Ice Lake and AMD Milan processors is expected to not only propel growths in server shipment for two consecutive quarters from 2Q21 to 3Q21, but also drive up the share of high-density products in North American hyperscalers’ enterprise SSD purchases, according to TrendForce’s latest investigations. In China, procurement activities by domestic hyperscalers Alibaba and ByteDance are expected to increase on a quarterly basis as well. With the labor force gradually returning to physical offices, enterprises are now placing an increasing number of IT equipment orders, including servers, compared to 1H21. Hence, global enterprise SSD procurement capacity is expected to increase by 7% QoQ in 3Q21. Ongoing shortages in foundry capacities, however, have led to the supply of SSD components lagging behind demand. At the same time, enterprise SSD suppliers are aggressively raising the share of large-density products in their offerings in an attempt to optimize their product lines’ profitability. Taking account of these factors, TrendForce expects contract prices of enterprise SSDs to undergo a staggering 15% QoQ increase for 3Q21.

Looking ahead to 4Q21, TrendForce expects a decline in server shipment to bring about a corresponding downward correction in enterprise SSD procurement capacity. Meanwhile, clients will continue to validate higher-layer PCIe G4 products from Kixoia and Micron. On the other hand, as the shortage of SSD components becomes alleviated going forward, enterprise SSD suppliers’ production capacities will likely increase as well. As a result, enterprise SSD contract prices for 4Q21 will likely remain relatively unchanged from 3Q21 levels.

Suppliers are making a strong push to develop PCIe G5 and CXL products as these new interfaces become available for server applications next year

Intel and AMD are expected to kick off mass production of Eagle Stream and Genoa CPUs, respectively, in 1H22. In addition to being compatible with PCIe G5, these server processors will also support the CXL (Computer Express Link) interface. TrendForce’s investigations indicate that NAND Flash suppliers have been fast-tracking their production of PCIe G5 SSDs in response to the upcoming mass production of Eagle Stream. As such, these SSDs are likely to see market release between 2Q22 and 3Q22.

Micron, on the other hand, has also announced its development of CXL products. Because CXL enables optimized data transmission between CPU and other components, such as memory, GPU, ASIC, and FPGA, memory solutions with CXL interface are likely to experience rapid growth in the hyperscale market, which is constantly in pursuit of faster data transmission speeds. TrendForce believes that the release of increasingly fast data transmission interfaces will bring about a massive increase in the expenses and technological challenges associated with SSD controller IC development. Enterprise SSD suppliers will subsequently have to jostle for market share by leveraging their respective unique competitive advantages.

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@trendforce.com

As third quarters have typically been peak seasons for the production of various end-products, the sufficiency ratio of DRAM is expected to undergo a further decrease in 3Q21, according to TrendForce’s latest investigations. However, DRAM buyers are now carrying a relatively high DRAM inventory due to their amplified purchases of electronic components in 1H21. The QoQ increase in DRAM contract prices are hence expected to slightly narrow from 18-23% in 2Q21 to 3-8% in 3Q21. Looking ahead to 4Q21, TrendForce believes that DRAM supply will continue to rise, thereby leading to either a further narrowing of price hikes or pressure constraining the potential price hike of DRAM products.

PC DRAM prices are expected to rise by 3-8% QoQ due to continued constraints on production capacities

From the perspective of demand, the stay-at-home economy has resulted in persistently high demand for notebook computers. Although discrepancies still exist among notebook brands’ inventory levels of various components, these brands are still making an aggressive attempt at maximizing their production of notebooks. However, as most of these brands are still carrying about 8-10 weeks’ worth of PC DRAM inventory (which is relatively high), PC DRAM purchasing strategies from the buyers’ side will therefore remain relatively conservative. From the perspective of supply, due to the rising demand for server DRAM, the production capacity allocated to PC DRAM is still in a severe supply crunch. Hence, DRAM suppliers are firm in their attitudes to raise PC DRAM quotes, and TrendForce expects the price negotiations between PC DRAM buyers and suppliers in 3Q21 to become both lengthier and more difficult as a result, with contract prices likely finalized at the end of July. Even so, what is now certain is that both sides have reached some level of understanding regarding the ongoing price hike of PC DRAM products. TrendForce forecasts a 3-8% increase in PC DRAM contract prices for 3Q21.

QoQ increase in server DRAM prices for 3Q21 are expected to narrow to 5-10% due to buyers carrying a relatively high inventory

With regards to demand, in spite of the minor increase in the shipment of whole servers, server DRAM buyers are less aggressive in their server DRAM procurement compared to the previous quarter. For instance, CSPs in North America and in China are currently carrying more than eight weeks of server DRAM inventory. In other words, procurement activities for server DRAM will gradually decline in the coming quarters in accordance with market demand. Notably, some Tier 2 clients will continue to procure server DRAM in 3Q21 since they did not sufficiently stock up in the prior quarters, and this demand will likely result in upward momentum for server DRAM prices. With regards to supply, the three major DRAM suppliers (Samsung, SK Hynix, and Micron) are limited by the fact they are currently carrying a relatively low inventory of server DRAM. As such, these suppliers will attempt to maintain their profitability by increasing prices each quarter. It should also be pointed out that the decreased DRAM demand from smartphone brands has in fact allowed more wiggle room for server manufacturers to negotiate for more favorable server DRAM prices. TrendForce thus believes that, before the supply side and demand side can reach an agreement, negotiations for server DRAM prices will become increasingly lengthy, and that server DRAM contract prices for 3Q21 will likely increase by 5-10% QoQ once negotiations are finalized.

Mobile DRAM prices are expected to defy market realities and increase by 5-15% QoQ, with potential risks of high price and low demand

In terms of demand, certain smartphone brands are now carrying a relatively higher inventory of mobile DRAM owing to Southeast Asia’s worsening COVID-19 pandemic, which led smartphone brands that primarily manufacture and sell their products there to begin lowering their production targets in 2Q21. In addition, some smartphone brands have set overly ambitious production targets; combined with the current shortage of foundry capacities, the discrepancies among the supply of smartphone components have now become more apparent, in turn forcing brands to slow down their mobile DRAM procurement in order to adjust their component inventories first. Demand has remained strong from clients in the smartphone market since 4Q21, so the supply fulfillment rate of the three major DRAM suppliers for their smartphone clients will be consistently higher compared to clients in other markets. As DRAM demand from non-smartphone applications ramps up and results in higher profitability than mobile DRAM, the three major DRAM suppliers will continue to adjust their production capacities in accordance with the shifting supply and demand from various segments, thus resulting in an increasingly constrained supply of mobile DRAM.

It should be pointed out that DRAM market leader Samsung has generally tried to minimize the profit discrepancies among its various products. Furthermore, the price hike in Samsung’s mobile DRAM products was relatively lower compared to Micron in 1H21. As a result, in view of the weakening mobile DRAM demand in 3Q21, Samsung will increase its mobile DRAM prices to a more notable extent compared to its US competitors. Going forward, Samsung’s price hike will lead its competitors to retool their pricing strategies, subsequently leading to an even wider price increase across the entire mobile DRAM market. As such, TrendForce expects mobile DRAM prices to increase by 5-15% QoQ in 3Q21, which is a step up compared to 2Q21. On the other hand, this price hike against market realities may potentially lead to a further decline in mobile DRAM demand, resulting in a situation with high price and low demand.

Graphics DRAM prices are expected to increase by 8-13% QoQ due to tight supply of GDDR6

Regarding graphics DRAM demand, many cryptocurrency miners were previously intent on mining ETH with older graphics cards as it reached peak prices. Nevertheless, the recent bearish turn of the cryptocurrency market has indirectly had an impact on demand for graphics cards equipped with GDDR5, although most of this impact primarily affected the spot market. For the contract market, more than 90% of graphics DRAM applications have migrated to GDDR6 products, which are now in short supply since new graphics cards are equipped with GDDR6 memory and are in high demand. In addition, the vast majority of GDDR6 stock from DRAM suppliers is currently cornered by graphics card manufacturers and game console manufacturers, thereby further limiting the graphics DRAM supply available to small and medium OEMs/ODMs. Regarding graphics DRAM supply, although GDDR6 accounts for more than 90% of the three major DRAM suppliers’ graphics DRAM production, demand for GDDR6 still far exceeds supply because end product demand has also migrated to GDDR6. As orders for server DRAM gradually ramp up in 3Q21, DRAM suppliers will prioritize fulfilling demand from the server market first. Hence, graphics DRAM contract prices for 3Q21 are expected to increase by 8-13% QoQ.

Consumer DRAM prices are expected to increase by up to 13% QoQ in light of strong demand

At the moment, consumer DRAM demand is relatively robust from the consumer electronics market and the telecom market. In addition, as China has been accelerating its build-out of 5G infrastructures and its rollout of WiFi 6 in the post-pandemic era, the overall demand for consumer DRAM remains strong going forward. On the other hand, the three dominant DRAM suppliers are slowing down their transition of production capacities from DDR3 products to CMOS Image Sensors or other Logic IC products now that the consumer DRAM market has taken a bullish turn. However, in the medium-to-long term, the general trend in the DRAM industry will still point to the elimination of the older 25/20nm process technologies and the continued migration towards more advanced 1Znm and 1αnm processes. As a result, given DDR3 products’ declining supply and strong demand, DDR3 prices for 3Q21 are expected to increase by 8-13% QoQ, while DDR4 prices are expected to undergo a minor growth of 3-8% QoQ in accordance with mainstream PC and server DRAM prices.

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@trendforce.com

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@trendforce.com

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 8.5% from the previous projection of 9.4% 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 14.3% 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@trendforce.com

Enterprise SSD procurement has been rising on the back of growing server shipments since 2Q21, according to TrendForce’s latest investigations. In particular, the share of 8TB products in shipments of SSDs to data centers has shown the most noticeable growth, which is expected to persist through 3Q21. However, certain SSD components and parts may be in shortage due to insufficient foundry capacity. TrendForce is therefore revising the QoQ hikes in contract prices of enterprise SSDs for 3Q21 to 10-15% from the previous projection of 5-10%.

TrendForce further indicates that the high demand for enterprise SSDs in 3Q21 is attributed to several factors. First, North American cloud service providers (hyperscalers) have pretty much completed their inventory adjustments and now continue to expand their storage capacity. Second, the flow of incoming orders to traditional server brands is getting stronger over the quarters as government agencies and SMBs increase their budgets for IT infrastructure. Third, Intel and AMD are ramping up production for server CPUs based on their respective new processor platforms. Following the adoption of new CPUs, the overall demand for enterprise SSDs has also shifted to higher-density products because clients want to upgrade their computing power and storage capacity. Specifically, demand is mainly trending toward 4/8TB SSDs since raising NAND Flash density can lower the cost of SSD deployment.

Supply leader Samsung will likely gain control over enterprise SSD pricing in the market

Regarding the supply end, Samsung has a higher flexibility in supplying SSDs compared to the other suppliers because it has a higher share of in-house components for its storage products. Therefore, in view of the possible shortage in certain SSD components, Samsung will likely be able to further expand its market share for enterprise SSDs. Furthermore, Samsung’s products are expected to account for more than 50% of enterprise SSDs (in terms of bits) shipped to data centers in North America in 3Q21. This dominance will likely further Samsung’s ability to dictate market prices going forward.

Intel, on the other hand, has been constrained in its ability to manufacture enterprise SSDs due to a shortage of PMICs. In addition, Intel has mostly been fulfilling orders for QLC products. As a result, Intel’s market share may potentially decrease in the TLC-dominant enterprise SSD sector. Regarding other suppliers including Kioxia and SK Hynix, although they have been able to raise their market shares due to gradual adoption of their products by clients, they are unlikely to catch up to Samsung for the time being.

On the PC client SSD front, at the moment, demand for notebook computers has remained strong, while the supply of SSD controller IC is still relatively tight. TrendForce therefore forecasts a slight 3-8% QoQ increase in client SSD contract prices for 3Q21. Regardless, suppliers will not slow down their process migrations. Starting from 3Q21, 176L PC client SSDs will be available on the market, with a corresponding increase in supply bits in the upstream SSD supply chain.

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@trendforce.com