TrendForce: Global DRAM industry value reaches US$10.8 billion, an increase of 9% in 2Q14

For the entire 2Q14, global DRAM industry value reached US$10.8 billion, an increase of 9% compared to the previous quarter, according to DRAMeXchange, the memory and storage research division of TrendForce. The impressive scale of the industry’s value, along with the market's improved profitability, are the result of the DRAM manufacturers' effective product mix adjustments. Of the three major DRAM suppliers, Samsung had the most impressive 2Q14 performance with an operating margin of 39%. SK Hynix trailed close behind its Korean rival with a 38% operating margin. Inotera, a subsidiary of Micron, ended up with the industry’s largest operating margin at 54.6%. In the second quarter, Samsung's and SK Hynix's market shares were 39% and 27%, respectively. Considering how the Korean manufacturers represent almost 70% of the entire DRAM market, their influences in the industry should not be underestimated. US based Micron, also a key player with influence over the market’s pricing movements, ended up with approximately 26% of the market by the end of 2Q14. With the DRAM industry's oligopoly structure becoming more apparent and supply continuously tightening, price drops have become relatively uncommon in the market. The DRAM industry value for 2014, as such, is projected to grow by an estimated 36% YoY to US$46.8 billion. 

Production Technology Analysis of DRAM Vendors 

Samsung again showed progress with its production technologies as its 25nm yield rate improved to 85% in the second quarter. Thanks to enhanced output growth and the continuously rising contract prices, Samsung’s 2Q14 revenues were able to grow by an estimated 20% compared to the last quarter. The Korean company's 2Q14 operating margins, meanwhile, benefited from lowered manufacturing costs, and reached up to 39%- the highest among the major DRAM manufacturers. 

SK Hynix, even though the company's Wuxi plant officially resumed its operations during the first quarter of this year, its revenues for the entire second quarter were up by only 6% due to limited production yields. However, following continued advancements in its 25nm wafer production technology, its revenues and operating margin, which reached close to 38% in 2Q14, have a chance of showing further improvements in the coming periods. 

Micron’s Singapore Tech plant has officially made a transition towards NAND flash products during the second quarter of this year and took steps to reduce its total wafer output, with 2Q14 DRAM revenues saw slightly declining 2%. Its operating margins ended up at approximately 25.5%, up slightly from the previous quarter thanks to its continuous efforts to transition towards 25nm technology. Micron currently still relies on the 30nm process for the most part when manufacturing memory products. With the developments for its 25nm technology continuing and the testing and mass production phase for its 20nm process scheduled to begin in 4Q14 and 1H15, respectively, the US company could effectively shorten the technological gap between itself and the aforementioned Korean companies as early as 2015. 

Inotera’s performance was the most noteworthy among the DRAM manufacturers thanks to its effective pricing structure and attention to profitable product lines. Not only did the Taiwanese company's operating margins reach 55% by the end of the second quarter, but its leading position with the 20nm manufacturing process also puts it ahead of its Taiwanese competitors. 

Nanya is currently focusing on producing specialty DRAM as well as working with special module plants on the production of its PC DRAM components. In the second quarter of this year, the company's performance turned out to be relatively stable, with revenues rising by an estimated 2.5% QoQ and operating margins reaching 36%. 

Winbond, as before, is continuing to see improvements in the sales of its specialty DRAM and small density Mobile DRAM components, and experienced an impressive 10.5% QoQ growth in its overall revenues. Other than raising its capital expenditure and increasing its wafer output to 40K this year, the company will continue to develop its 46nm manufacturing process. With its manufacturing cost lowered, its 2Q14 operating margins rose to approximately 9.3%. 

Powerchip's 2Q14 DRAM revenues were equally noteworthy, rising by approximately 20% from the previous quarter thanks to the growth of the company's foundry business as well as its raised PC DRAM output. As its P3 plant currently still has room for growth, the company is likely to consider a major expansion for its existing wafer production capacity.