TrendForce：DRAM Market Oligopoly to Face Challenges in 2015 as Manufacturers Expand Capacity

An increasing number of DRAM manufacturers are planning to expand their capacity in the fourth quarter of 2014 as DRAM market supply tightens, while bit supply could grow by nearly 30% next year following recent decreases in die size and adjustments of capacity. As a result, the industry’s oligolopy structure could face considerable challenges in 2015, among them oversupply that would eat into producers’ profit margins, said Avril Wu, assistant vice president of DRAMeXchange, a memory and storage research division of TrendForce. 

As it becomes more difficult to migrate towards the 2xnm manufacturing process and the risk of lowered wafer output heightens, an increasing number of manufacturers are making changes to their production processes that may disrupt the industry’s oligopoly structure. For instance, Samsung has announced that it will reserve major portions of its S3 Plant's capacity for DRAM production, and is currently in the process of deploying the necessary equipment and materials. The South Korean electronics giant will likely begin manufacturing its DRAM wafers by the end of 2014, and is expected to focus on PC DRAM. In the second half of 2015, Samsung’s maximum S3 DRAM capacity is forecast to reach 60K per month. Based on the worldwide DRAM industry’s existing 1050K/month production rate, this would represent an increase of approximately 5% for the entire industry. 

In response to Samsung’s production strategy, both SK Hynix and Micron have begun to prepare their own capacity-related adjustments. The deployment of equipment for SK Hynix’s M14 fab, whose operation is scheduled to begin next year, will likely take place as early as the middle of 2015. While SK Hynix is not looking to make any official capacity expansions at the moment, it could easily employ such a tactic once its market shares and future position are at stake. Micron, much like its rivals, is anticipated to break away from its usual production routines as it encounters increasing challenges in the 25nm manufacturing process and experiences lower wafer output. The company has recently decided to utilize its Taiwanese subsidiary’s R2 plant more effectively in order to maintain its wafer production levels at 75K/month.