At the moment, the DRAM market has formally entered a new cycle of rising prices, and 2Q21 will see larger QoQ price increases compared with 1Q21, according to TrendForce’s latest investigations. Looking ahead to 2Q21, shipments of various end products are expected to remain fairly strong. At the same time, clients in the data center segment will resume large-scale procurement. Hence, DRAM buyers across different application segments will be under pressure to stockpile. After experiencing QoQ increases of 3-8% for 1Q21, the average contract prices of different kinds of DRAM products are forecasted to rise more significantly by 13-18% QoQ for 2Q21.

PC DRAM contract prices are projected to rise by 13-18% QoQ due to urgent demand from notebook manufacturers driven by bullish notebook market

Notebook computer production on the whole will maintain a fairly healthy momentum in 2Q21. The demand for PC DRAM products therefore continues to grow as PC OEMs have been raising their annual production targets. Since buyers of PC DRAM products are now carrying a relatively low level of inventory (i.e., around 4-5 weeks) and anticipating that DRAM prices will keep rising in the foreseeable future, they have been further ramping up their DRAM procurement activities. With regards to supply, the three dominant DRAM suppliers retain a conservative approach for raising bit output. The production capacity share of PC DRAM could experience a squeeze in the future because of robust demand in other application segments. For instance, some smartphone brands continue to vigorously stock up on memory components. Also, the demand for server DRAM products are expected to warm up rapidly in 2Q21. All in all, contract prices of PC DRAM products will register significant QoQ increases of 13-18% for 2Q21.

Server DRAM prices are projected to rise by nearly 20% QoQ due to cyclical upturn in server shipments

With regards to the demand for server DRAM, the second quarter is traditionally the peak season for server shipments while also being a fairly busy period within the year for the procurement of other kinds of DRAM products. Hence, the situation of different sources of demand competing for DRAM suppliers’ production capacity becomes more evident in this period. TrendForce expects server DRAM buyers to be more aggressive in inventory building during 2Q21 and begin to raise the procurement quantity on a monthly basis. This, in turn, will sustain the uptrend in server DRAM prices. With regards to supply, the server DRAM production capacities of the three dominant suppliers will still not return to the level that existed in the middle of 2020, although these suppliers will slightly increase the share of server DRAM in their overall DRAM production capacities in 2Q21. In addition to the peak-season effect, the COVID-19 pandemic continues to influence server manufacturers as well. Server manufacturers have intentionally extended their component inventories by several more weeks because of the pandemic-induced uncertainties. TrendForce is therefore not discounting the possibility of server DRAM contract prices registering a QoQ increase as large as around 20% for 2Q21.

Mobile DRAM contract prices are projected to remain bullish due to smartphone brands’ expanded procurement activities in advance of market risks

With regards to mobile DRAM demand, smartphone brands will not relax their inventory-building efforts in 2Q21 as the production capacity crunch in the foundry market has made them more vigilant in maintaining a stable component supply. The quarterly total smartphone production volume for 2Q21 is forecasted to exceed 300 million units. Although the three dominant DRAM suppliers have yet to adjust their product mixes for 2Q21, they will probably have to later on because the ASPs of server DRAM and other kinds of DRAM products are rising faster than the ASP of mobile DRAM. Hence, the production capacity share of mobile DRAM could be scaled back so that the production capacity share of server DRAM could grow. Additionally, the behavior of mobile DRAM buyers has been influenced by the cyclical upturn in prices and the anxiety over a tightening of supply in the future. They will continue to procure in large quantities so as to avoid the risks of a supply shortage and larger price hikes. This means that mobile DRAM prices will be on the uptrend as buyers stock up in advance.

Graphics DRAM contract prices are projected to rise by 10-15% QoQ due to high demand for graphics cards from cryptocurrency miners

With regards to demand, the three growth pillars of the graphics DRAM market are graphics cards, game consoles, and cryptocurrencies. At the same time, the mining of various cryptocurrencies has become a lucrative activity. Besides graphics cards that represent the more conventional mining technologies, miners are buying notebooks for this purpose as well. Sensing opportunities, Nvidia has launched CMP (cryptocurrency mining processor) cards and thereby taken up more of DRAM suppliers’ resources. This, in turn, has led to small- and medium-sized OEMs and ODMs experiencing a widening supply gap for graphics DRAM. With regards to supply, the three dominant DRAM suppliers have all reassigned their production capacity for graphics DRAM from GDDR5 to GDDR6, resulting in an increasingly lopsided discrepancy between the two products’ bit supplies, so there is no effective resolution to the ongoing shortage of GDDR5 products. As for GDDR6, demand remains strong as cryptocurrency mining is keeping the demand for graphics cards at a high level, although Nvidia is hogging much of the existing production capacity for graphics DRAM. Looking ahead to 2Q21, the supply situation will still be very strained unless the values of the mainstream cryptocurrencies undergo a drastic change. TrendForce forecasts that contract prices of graphics DRAM will rise by about 10-15% QoQ during this period.

Consumer DRAM contract prices are projected to rise by up to 20% QoQ due to intensifying shortage

With regards to consumer DRAM demand, the demand for TVs, set-top boxes, and networking devices remains strong due to the prevailing stay-at-home economy. Additionally, the build-out of 5G infrastructure and the rapid migration to Wi-Fi 6 contribute to the brisk demand for low-density consumer DRAM products. The supply gap in consumer DRAM market is already significant at this moment and will likely widen in 2Q21. With regards to supply, the overall production capacity for DDR3 products is gradually shrinking. The three dominant suppliers are migrating to the more advanced processes such as the 1Z-nm and 1-alpha nm while reassigning the wafer production capacity of the older processes such as the 20nm and 25nm to CMOS image sensors. Also, Taiwan-based suppliers have allocated some wafer production capacity to products with higher margins (e.g., logic ICs and Flash memory). As a result, the consumer DRAM market is in a rare situation of experiencing a supply shortage and a demand rebound at the same time. There is a strong likelihood that prices of some consumer DRAM chips will register a QoQ increase of almost 20% for 2Q21 contracts, and there is room for further hikes following quarterly contract negotiations.

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

Among the various display technologies used for smartphones in 2021, AMOLED models are expected to account for a 39% penetration, thanks to smartphone brands’ increasing adoption of this technology, according to TrendForce’s latest investigations. In the entry-level and mid-range segments, the smartphone demand for a-Si LCD models remains strong, although this technology’s penetration rate is expected to undergo a slight decrease to 28%. On the other hand, LTPS LCD models are continuing to lose market share to competing technologies, resulting in a 33% penetration rate, while LTPS HD LCD models will occupy a growing share of this segment.

TrendForce indicates that smartphone brands’ procurement activities for components in 2H20 will persist throughout 2021 for two reasons: First, the industry on the whole expects demand for smartphones to ramp up considerably this year. Second, production capacities across the entire semiconductor supply chain have been tight, with some segments even showing severe shortage, thus prompting downstream clients such as smartphone brands to stock up on certain components in order to mitigate the potential risk associated with component shortages.

With regards to the development of smartphone display technologies, panel suppliers have been regaining client orders for rigid AMOLED panels through aggressive pricing since 2H20. Owing to increased adoption by smartphone brands this year, rigid AMOLED models are expected to maintain a strong market presence in the mid-range and premium mid-range segments. Flexible AMOLED models, on the other hand, will likely dominate the high-end and flagship segments. Going forward, AMOLED models will gradually cannibalize the market shares of LTPS LCD models in the mid-range and premium mid-range segments, in turn forcing LTPS LCD models into a lower price segment.

Market demand for entry-level and mid-range smartphones, especially for HD models, has remained strong since 2020, due to the impact of the COVID-19 pandemic. However, the supply of key components in these smartphones (including a-Si LCD panels as well as DDI and TDDI ICs) has been in shortage in light of the foundry industry’s tight production capacities. As prices of a-Si LCD panels and ICs spiked, panel suppliers saw this upturn as the perfect opportunity to fulfill the existing demand for a-Si products with LTPS products and in turn expend their production capacity for LTPD LCD panels. Smartphone brands began adopting a-Si HD and LTPS HD LCD panels interchangeably in an increasing number of models, thus giving TDDI ICs flexibility to be used in a greater number of compatible handsets.

At the moment, IC supply remains the greatest bottleneck in the overall smartphone supply chain; case in point, TDDI supply is tight to the point of shortage. TrendForce believes that two key factors will exert significant influence over the smartphone panel industry going forward: First, Chinese IC design companies are likely to obtain wafer input priorities in Chinese foundries thanks to government policies. These IC design companies may potentially experience considerable growth as a result and disrupt the predominant oligopoly of Taiwanese IC design companies in the smartphone panel market. Second, once the ongoing capacity expansion effort of Chinese foundries concludes, their additional production capacities will alleviate the current shortage of IC supplies, with IC prices subsequently entering a downward trajectory. As a result of lowered IC prices, the relationship between LTPS HD panels and a-Si HD panels will likely shift from complementary to competitive, with both product categories struggling for dominance in the HD smartphone model segment.

For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms. Vivie Liu from the Sales Department at vivieliu@trendforce.com

The Line S2 fab of Samsung in Austin, Texas sustained a power interruption, which has forced it to suspend operation since mid-February, under the impact from the winter storm. TrendForce’s latest investigations indicate that the capacity utilization rate for the entire fab is not expected to climb back to over 90% until the end of March. In particular, Samsung manufactures several products that are highly important for the production of smartphones, including the Qualcomm 5G RFIC, Samsung LSI OLED DDIC, and Samsung LSI CIS Logic IC. Supply-wise, the first two products sustained the brunt of the winter storm’s impact, and global smartphone production for 2Q21 is therefore expected to drop by about 5% as a result.

According to TrendForce’s investigations, Samsung was able to prepare for the power interruption ahead of time as the company had been forewarned by the local utility. Hence, the loss of WIP (work in progress) wafers caused by the incident was minimal. However, the delay in the resumption of full operation at the plant is expected to last more than two weeks, during which the fab will suspend its wafer input. The incident on the whole will have a definite impact on the global foundry industry that is already experiencing a serious capacity crunch. In terms of wafer input, the Qualcomm 5G RFIC, Samsung LSI OLED DDIC, and Samsung LSI CIS Logic IC account for 30%, 20%, and 15% of the Line S2’s monthly production capacity, respectively.

Of the three aforementioned products, the Qualcomm RFIC is primarily supplied to smartphone brands to be used in 5G handsets. This product is delivered to clients as part of either AP bundles or 5G modems. The winter storm’s impact on the production of the Qualcomm RFIC is expected to take place in 2Q21, resulting in a 30% decrease in 5G smartphone production for the quarter. However, TrendForce expects this incident to impair the 2Q21 production of all smartphones by only about 5%, given smartphone brands’ existing inventory of 5G AP bundles and 5G modems, in addition to the fact that smartphone brands are likely to keep up their quarterly smartphone production by increasing the production of 4G handsets to make up for the shortfall in 5G handsets. Furthermore, TrendForce expects the Line S2 fab to prioritize resuming the production of RF products ahead of other products, in turn further mitigating the winter storm’s impact on global smartphone production.

On the other hand, the Samsung LSI OLED DDIC is primarily used in Apple’s iPhone 12 series. The winter storm’s impact on these DDICs will similarly take place by the end of 2Q21. Even so, Apple likely possesses sufficient DDIC inventory, at least in the short term, since the period of peak DDIC demand for the company’s existing smartphone models has already passed. Moreover, the iPhone 12 mini may reach EOL earlier than expected due to disappointing sales. Should Apple decide to cut iPhone 12 mini production, the company will be able to further minimize the impact of OLED DDIC undersupply. Finally, as sales of the iPhone 11 (which is equipped with an LCD, instead of OLED, panel and therefore does not require OLED DDIC) have been resurging recently, Apple may increase the share of iPhone 11 in its total smartphone production in order to keep up its quarterly production volume. In light of these factors, TrendForce believes that the production volume of iPhones in 2Q21 will suffer only limited impact from OLED DDIC supply disruptions.

On the whole, although the production of 5G smartphones will face a relatively considerable challenge in 2Q21, smartphone brands will be able to keep up their quarterly production volume by raising the production share of 4G smartphones instead. TrendForce thus projects the winter storm to impair smartphone production for 2Q21 by no more than 5%, while maintaining the previous forecast of 1.36 billion units produced for 2021. However, TrendForce also does not rule out the possibility that the winter storm will lower the penetration rate of 5G smartphones in 2021 from 38%, as previously forecasted, to 36.5%.

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

The quarterly total revenue of the NAND Flash industry came to US$14.1 billion in 4Q20, showing a QoQ drop of 2.9%, according to TrendForce’s latest investigations. The total bit shipments of the NAND Flash industry in 4Q20 registered a QoQ increase of nearly 9%. This gain for the most part offset the negative impacts brought about by the QoQ decline of nearly 9% in the overall ASP of NAND Flash products, as well as by the unfavorable exchange rates that impaired some suppliers’ performances. At the same time, clients in the server and data center segments continued their inventory reduction efforts that had begun in 3Q20. Since their procurement drive remained fairly weak, contract prices of NAND Flash products continued their decline as well. However, NAND Flash suppliers were receiving substantial orders from OPPO, Vivo, and Xiaomi. On the whole, the strong demand in the smartphone segment mostly compensated for the weak demand in the server and data center segments. In the notebook computer segment, Chromebook devices were the primary sales driver, but the storage components of most Chromebooks are low-density solutions, meaning related NAND Flash demand is somewhat limited.

Turning to 1Q21 (this quarter), the bit output of the NAND Flash industry continues to grow significantly due to two factors. First, Samsung and YMTC are actively expanding production capacity. Second, all suppliers are eager to migrate to the more advanced stacking process. On the demand side, PC and smartphone brands have kept stocking up on components. However, they have also slightly corrected down their demand as the first quarter is the traditional off-season. As for clients in the server and data center segments, they have yet to restart large-scale procurement even though their inventories have generally returned to a healthy level. As such, during price negotiations, NAND Flash suppliers still expect the oversupply situation in the market to intensify and thereby further drive contract prices of NAND Flash products downward. Therefore, NAND Flash suppliers’ revenues are projected to undergo a QoQ decline in 1Q21.

Samsung

Two factors helped Samsung’s performance in the NAND Flash market during 4Q20. First, Chinese smartphone brands (with the exception of Huawei) continued to aggressively build up their component inventories so as to fight for more market share. Second, PC OEMs released more upside orders than anticipated because of the further demand growth for notebook computers. Samsung’s NAND Flash bit shipments in 4Q20 rose by 7-9% QoQ as a result of the strong procurement momentum in the smartphone and PC segments. However, the ASP of its NAND Flash products dropped by more than 10% QoQ for the same period. Although clients in the data center segment did begin sending out orders for servers and components at that time, their demand was still very limited. As for clients in the enterprise server segment, they were mainly focused on inventory reduction. With the market leaning toward oversupply, Samsung had to lower prices and thereby experienced a revenue decline. Compared with 3Q20, Samsung’s NAND Flash revenue fell by 3.4% to US$4.644 billion.

Regarding production and technology plans, Samsung this year will be the leader among NAND Flash suppliers in raising production capacity. Besides continuing to expand the production capacity of the Xi’an Fab 2, Samsung will also set up a production line for 3D NAND Flash at P2L (in the Pyeongtaek campus). Most of Samsung’s NAND Flash products are still based on the V5 (92L) process at this moment. However, the supplier will significantly raise the output share of NAND Flash from the V6 (128L) process this year. The application of the V6 process technology will expand to more of its offerings for SSDs and UFS solutions.

Kioxia

Following the end of Huawei’s stock-up activities, Kioxia was unable to fully regain the demand for its mobile NAND Flash products through orders from other Chinese smartphone brands in 4Q20. At the same time, the supplier was affected by the weak demand for enterprise SSDs. On the other hand, there were other sources of demand such as notebook computers and game consoles. Consequently, Kioxia’s bit shipments in 4Q20 still registered a small increase. As for the ASP, Kioxia experienced a QoQ decline of 8-10% because of the general oversupply situation. On account of these factors, Kioxia’s NAND Flash revenue slid by 11.4% QoQ to US$2.749 billion for 4Q20.

Regarding production and technology plans, Kioxia will gradually expand the production capacity of K1. As for the construction of new fabs, Kioxia is staying with its plan to begin building Fab 7 in Yokkaichi and K2 in Kitakami in 1Q21. These fabs, which will be producing BiCS6 or more technologically advanced products, are expected to start contributing to the supplier’s output sometime in 2022. Technology migration will also be the main driver of its bit output growth. Currently, the majority of Kioxia’s NAND Flash products are still manufactured with the 96L BiCS4 process. Going forward, the supplier intends to raise the shipment share of 112L BiCS5 products this year.

Western Digital

Western Digital saw the ASP of its NAND Flash products drop by 9% QoQ for 4Q20 as its clients in the server segment were reducing their inventories. On the other hand, the sales of its channel-market products continued to grow, and the robust demand for notebook computers led to an impressive shipment result for its client SSDs. Western Digital’s bit shipments in 4Q20 increased by 7% QoQ. This roughly compensated for the decline in the ASP. All in all, the supplier posted a QoQ drop of just 2.1% in its revenue to US$2.034 billion.

Concerning its activities, Western Digital will be collaborating with Kioxia in the construction of Fab 7 and K2. The additional production capacity from these two plants will help the allied suppliers to deal with market competition in the future. The 96L BiCS4 process will be Western Digital’s primary technology for NAND Flash production this year. Additionally, Western Digital will be providing OEMs with samples of TLC and QLC products that are manufactured with the 112L BiCS5 process sometime between 2Q21 and 3Q21. Western Digital’s next-generation BiCS6 process is also set to enter the production stage in 2022.

SK Hynix

SK Hynix benefited from the aggressive stock-up activities of Chinese smartphone brands in 4Q20. Its bit shipments rose by 8% QoQ, but its ASP also dropped by 8% QoQ due to the general oversupply situation. With the decline in the ASP being canceled out by the increase in bit shipments, SK Hynix kept its NAND Flash revenue relatively constant for 4Q20. It posted a miniscule QoQ decline of 0.2% to US$1.639 billion.

This year, SK Hynix will rely on technology migration as the primary means of increasing bit output. The share of 128L products in its bit output came to around 30% at the end of 2020 and is expected to keep growing to surpass the output shares of 72L and 96L products in 2021. The supplier has also scheduled the launch of its 176L products for 2H21. Regarding the acquisition of Intel’s NAND Flash plant in Dalian, the transfer of the ownership of the plant along with Intel’s SSD assets is expected to be completed by the end of this year as originally planned.

Micron

Thanks to stock-up activities of smartphone brands and the growing demand for QLC SSDs from PC OEMs, Micron posted a significant QoQ increase of 17-20% in its bit shipments for 4Q20. However, like other suppliers, its ASP fell in the same period due to the general oversupply situation and registered a QoQ decline of 10-13%. In terms of revenue, Micron posted a QoQ increase of 2.9% to US$1.574 billion.

On the technology front, Micron has 128L products, but unlike other suppliers’ strategies, Micron will not ship 128L products to its main clients. Instead, Micron is focusing on the development of the second-generation 176L products that will serve as its main offerings in the future. Its clients will thus bypass the 128L process and advance directly to 176L process. OEMs are expected to begin receiving samples of 176L products from Micron in 2Q21 in accordance with the supplier’s schedule. With respect to the cell type, Micron is raising the shipment share of QLC products. Currently, more than 50% of supplier’s NVMe SSD shipments (in bit terms) are QLC products.

Intel

Intel made a recovery in its bit shipments in 4Q20 after inventory adjustments in the data center and enterprise server segments had caused a QoQ decline of nearly 25% in 3Q20. The procurement momentum of its clients was still fairly weak in 4Q20, but it did pick up somewhat compared with the previous quarter. Additionally, the demand from PC OEMs continued to rise. Consequently, Intel’s bit shipments grew by nearly 25% QoQ for 4Q20. Again like other suppliers, Intel saw its ASP drop in 4Q20 because of the general oversupply situation. The QoQ decline came to almost 20%. On balance, Intel’s NAND Flash revenue went up by 4.8% to US$1.208 billion for 4Q20.

Intel will probably not make any significant changes to its existing plans for production capacity and product mix as it has sealed the deal to sell its NAND Flash business to SK Hynix. It will continue to leverage its advantage in the enterprise SSD market to push its clients to adopt 144L products. Regarding the distribution of its product shipments by technology, Intel will be raising shipment share for the 144L stacking process and the QLC architecture. To increase the output of 144L products, Intel will expand the production capacity of the Dalian plant this year. From a long-term perspective, SK Hynix will be the main beneficiary of this capacity expansion effort.

On the whole, TrendForce’s investigations find that PC OEMs have been releasing a substantial amount of upside orders since the start of 1Q21. Although the oversupply situation is worse compared with 4Q20, it has become more moderate than expected. Moreover, the market is anticipating that clients in the data center segment will reinitiate large-scale procurement in 2Q21. The sentiment has thus turned more positive with respect to contract negotiations, and the general price decline has also begun to ease earlier than expected. Suppliers’ sales performances are projected to rebound rapidly 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@trendforce.com