TrendForce Says Next-Generation Memory Causes Only Slight Drop in Q2 Mobile DRAM Prices

According to DRAMeXchange, a division of TrendForce, smartphone shipments have been weak since the beginning of 2015. The decline in Q1 shipments was up to 9.2% QoQ. Although heavyweights Apple and Samsung are showing relatively strong shipments figures in Q2, significant smartphone growth is not expected for the quarter as channel inventory in China remains high. TrendForce projects global smartphone growth at 6.8% QoQ in the second quarter, while a 14.8% QoQ shipment increase is expected for the China region (including export shipments of Chinese brands). Neither figure comes close to the 25% quarterly growth the smartphone market experienced in the previous two years. 

DRAMeXchange’s Assistant Vice President Avril Wu expects mobile DRAM to see stable price trends in 2015. Currently, mobile DRAM accounts for over 40% of total DRAM production. Along with server DRAM, mobile memory will bring much needed price stability to the memory industry. Whether or not DRAM suppliers will continue to see profit growth this year will be highly dependent on their LPDDR4 shipment ratios – whoever can take advantage of the initial premiums will come out on top. 

Based on Wu’s forecast, the QoQ decline in the overall average selling price for mobile memory will stay within 5% due to the following: 

(1) Increases in mobile DRAM density per phone for flagship devices 

As this year’s new iPhone is expected to come with 2GB (16Gb) of LPDDR4, an improvement over the previous model’s 1GB of LPDDR3, other high-end smartphone makers will likely follow suit. Samsung and LG, for instance, will be respectively upgrading the Galaxy S6 and G4 to 3GB of LPDDR4. Xiaomi’s Note and Lenovo’s Vibe Z3 Pro are both expected to come with 4GB of LPDDR4. With this upgrade wave, some high-end smartphones will consume the same amount of DRAM as notebooks (which typically come with 4GB of PC DRAM). This should be more than enough to correct the slight oversupply on the current mobile memory market. 

(2) Next-generation mobile DRAM LPDDR4 enters the market 

Regardless of the DRAM product category, when the newest generation of memory products enter the supply chain there will be a price premium that reflects higher initial production costs. The latest generation of mobile DRAM, LPDDR4, is arriving in the second quarter. The aforementioned flagship devices mostly run on Samsung’s Exynos processor, but Qualcomm’s S810 also uses LPDDR4 memory solutions. The advanced memory thus will have a 30-35% premium over LPPDDR3 in its first quarter on the market, which will significantly help stabilize the mobile DRAM price trend. 

(3) LPDDR2’s replacement by LPDDR3 adds complexities that make price drop unlikely 

China’s smartphone market has been slacking for both domestic and foreign shipments. While the outlook for Q2 is conservative, LPDDR2 is showing some increasing demand in the lower-end devices due to cost concerns, especially with the adoptions of Spreadtrum’s 7731 and MediaTek’s 6571 processors. However, Samsung has basically stopped producing LPDDR2, and SK Hynix and Micron have drastically reduced their LPDDR2 production ratios. As Nanya is the only remaining memory maker that can provide a steady and large supply of LPDDR2, prices (for eMCP 4+4/8+8 in particular) will stay constant and may even rise slightly in the third quarter as demand picks up during the peak season.