TrendForce: Six-Month DRAM Price Uptrend Ends as First-Half Nov. Contract Prices Fall 3%

The contract price uptrend that persisted for almost half a year in the DRAM market has officially ended this month, according to DRAMeXchange, a division of the Taiwan-based market intelligence firm TrendForce. The average contract prices for DDR3 4GB modules dropped an estimated 3.1% in in the first half of November, ending at around US$ 31.75, while the highest contract prices fell from US$33.5 to US$32, showing a drop of 4.5%. While the DRAM manufacturers were initially successful in pushing the contract prices upwards as they attempted to counter the effects of the off-peak season during October, many faced resistance from PC-OEMs. As it became clear that Samsung and SK would be shifting their priorities from profits to shipments after achieving stable yield rates with 25nm technology, some of the OEMs even attempted to restart negotiations and push for lower prices. As a result of these developments, DRAM contract prices underwent massive changes during November, and at one point fell to US$31.5, the average from the third quarter. In the near future, the price drop is expected to continue given the potential surge in DRAM output and the unlikelihood of capacity being allocated to Mobile DRAM during the smartphone market’s off-peak season. It is possible the prices in the first quarter of 2015 will drop below US$30. 

Korean DRAM Manufacturers Manage to Achieve Stable 25nm Yield Rates; Micron to Encounter Numerous Challenges with 20nm Technology 

The process of migrating from 30nm to 20nm technology has proved challenging for many DRAM manufacturers given the difficulties involved in shrinking transistors. Samsung, for example, faced considerable production related obstacles in the 28nm manufacturing process, and was later forced to abandon its development because it could not improve the production process sufficiently. In an effort to resolve that problem, the company allocated portions of its capacity back towards the 35nm process and devoted time to developing 25nm technology, which it hoped would lead to future breakthroughs. After a year of work, the South Korean electronics giant was able to achieve steady yield rates with the latter process during the second half of 2014. Samsung's main goal is to raise the production ratio of its 25nm products up to 70% by the end of the year, and to officially take steps to migrate towards the 20nm manufacturing process in 2015. Its progress with manufacturing technology is currently ahead of all other DRAM manufacturers in the industry. 

Like Samsung, SK Hynix is also placing great emphasis on manufacturing technology. As its 29nm process's production life cycle reached 2 years, the company began to turn its attention towards manufacturing 25nm chips, and started their mass production during the end of 2013. While it initially had trouble increasing its overall 25nm yield rate, following a series of adjustments and efforts, the company was still able to improve its output significantly. From the fourth quarter of this year to the first quarter of 2015, SK Hynix's priorities will be to manufacture the majority of its products using the 25nm process, and to ensure that the mass production of its 21nm chips will be ready by mid-2015. 

Inotera, a Taiwan-based subsidiary of Micron, will oversee most of the US semiconductor company’s 20nm product developments rather than its Hiroshima fabrication plant, whose team was originally responsible for handling them. Meanwhile, the US-based semiconductor company is currently producing 25nm products at a steady rate. Given that the Japanese plant's equipment is vastly different than that used by Inotera, the latter will be expected to spend at least NT$ 50 billion (US$1.67 billion) on equipment upgrades. In the future, the Hiroshima plant's manufacturing expertise should prove helpful if Inotera encounters any bottlenecks in the manufacturing process. Inotera will undoubtedly require time to become familiar with the 20nm manufacturing process, considering that it directly skipped over the 25nm process. Judging by the obstacles that Samsung and SK Hynix faced when attempting to handle 20nm technology, TrendForce believes Micron will encounter similar challenges as it tries to get the most out of its 20nm manufacturing process.