TrendForce Reports 1Q17 Global Mobile DRAM Revenue Fell by Just 1.7% From Prior Quarter as Average Contract Price Remained Stable

DRAMeXchange, a division of TrendForce, reports that the global mobile DRAM revenue for the first quarter of 2017 dropped slightly by 1.7% compared with the prior quarter. The smartphone market in the first quarter went through the conventional off season in the first quarter with the global device production volume declined by 23% from last year’s fourth quarter. On other hand, contract prices of mobile DRAM have kept climbing. These counteracting factors resulted in a small dip in the total mobile DRAM revenue.

Looking at the top three suppliers, Samsung and SK Hynix saw their revenues dropped slightly in the first quarter whereas Micron’s revenue grew significantly against the seasonal headwinds by 22.3% versus last year’s fourth quarter. Nonetheless, Samsung and SK Hynix’s combined revenue market share was more than 80% in the first quarter. Altogether, the top three suppliers accounted for around 97.7% of the global market in the same period.

Going forward, smartphone market will experience some demand recovery in the second quarter. At the same time, contract prices of mobile DRAM will continue rise though at a more moderate pace. Memory suppliers therefore will see increases in their mobile DRAM revenue. Furthermore, mobile products are expected to represent an even greater portion of their respective revenue streams.

Suppliers’ future revenue performances will hinge on the pace of their technology migrations and market penetration of their advanced technologies

Samsung has not only been the revenue leader but also the technology leader in the mobile DRAM market. Taking the initiative in the technology race has allowed the supplier to significantly reduce its product costs and enlarge its market share. These advantages in turn translate to greater revenue. In this first quarter, Samsung already launched 18nm mobile products and started to scale back the production on its older 20nm process. DRAMeXchange projects that by this third quarter, over 50% of Samsung’s mobile DRAM bit output will come from the 18nm process.

In this first quarter, Samsung was affected by weaker than expected demand from Chinese smartphone brands such as OPPO and Vivo as well as experiencing some issues with its technology migration. As a result, the supplier’s mobile DRAM revenue dipped slightly versus the prior quarter and came to about US$3.16 billion, translating to a global market share of 58.4%.

SK Hynix’s main for this year is to increase the yield and the output share of its 21nm process. Success in this area will help raise the market penetration of the supplier’s LPDDR4 and LPDDR4X products. SK Hynix also plans to expand the production capacity of its M14 fab to 80,000 wafers per month. Both the capacity expansion of the M14 plant and increase in the 21nm yield will contribute to SK Hynix’s revenue performance for the entire 2017.

On the technology front, SK Hynix is moving towards 1x nanometer manufacturing. It is expected that the supplier will first apply the 1x nanometer technology to the production of its PC DRAM products. SK Hynix may start sending out samples of its 18nm mobile DRAM products at the end of this year, though TrendForce anticipates that mass production will not take place until the first quarter of 2018 at the earliest.

Micron’s first-quarter mobile DRAM revenue jumped by 22.3% from the preceding quarter to reach US$830 million. The supplier benefitted from the rising prices in the contract market as well as strong demand from major clients such as Apple and Huawei.

With regard to Micron’s production and technology timetable, the company’s current situation is similar to that of SK Hynix. Micron is relying on its 25nm and 20nm processes to ship most of its mobile DRAM products. At the same time, the supplier is fully committed to raising the yield rate and output share of its 20nm process, which is now at a critical stage of development.

As for Taiwanese memory makers, Nanya and Winbond both posted growth in their mobile DRAM revenues for the first quarter. Compared with the fourth quarter of last year, Nanya’s revenue growth was more moderate. However, Nanya will continue to see growth this second quarter due to the increase memory content per box for entry-level smartphones and devices related to the Internet of Things.

Winbond’s strategy has been to give priority to the production of specialty and mobile DRAM products. Winbond maintained the usual level of revenue growth and market share for the first quarter. For this first quarter, Winbond maintained the revenue growth rate of 5~10% versus the prior quarter.

Increase in average memory contents of devices will drive profits for suppliers 

Though smartphone brands are increasing the memory content of their devices, their demand for mobile DRAM products are also being constrained by rising contract chip prices over the past few quarters. In the end, market forces will determine the strength of the demand, which is the engine of profit for the DRAM suppliers. According to DRAMeXchange’s projection, the average DRAM content per device in the smartphone market may grow by more than 30% annually for 2017. The top three DRAM suppliers therefore can expect that their profits will continue to grow.