According to TrendForce investigations, total DRAM revenue in 1Q22 decreased by 4.0% QoQ, reaching US$24.03 billion. The primary reason for this drop stems from market inflation, weakening demand, and the outbreak of the Russian-Ukrainian war at the end of February affecting the performance of terminal consumption. At the same time, client-end inventory levels continue to rise, so their primary goal has become digesting inventory. Due to sluggish overall sales momentum, the prices of various DRAM products fell, resulting in overall DRAM revenue in 1Q22 succumbing to decline.
According to TrendForce, thanks to favorable demand in the PC and automotive market, the revenue of Micron, one of the three major DRAM manufacturers, rose slightly by 2.4%. But Samsung and SK Hynix revenue fell by 1.1% and 11.8% respectively. In total, these two South Korean manufacturers account for a market share of 70.8%, remaining firmly in the top two. Affected by falling contract pricing, the operating profit ratios of these three companies were revised downward, with Samsung, SK Hynix, and Micron dropping to 48%, 39%, and 40.1% respectively. Looking forward to subsequent developments, as DRAM continues to move to advanced processes, cost is expected to be further optimized. If negative market factors no longer accumulate, profits for these companies are expected to improve further.
In terms of production capacity planning, Samsung's 2022 goal remains focused on capacity expansion. DRAM wafer starts at its new P3L fab is expected in mid-2023 at the earliest and, in terms of products, the company will continue pushing towards DDR5. In the second half of this year, the DDR5 proportion of production dedicated to PCs and Servers is expected to increase. SK Hynix's M16 fab in Korea and Wuxi fab in China have also exhibited a slight increase in wafer starts. However, since the migration of M10 to logic products caused a drop in DRAM wafer starts, total wafer starts only increased slightly. In terms of technology, SK Hynix has already allocated a small amount wafer starts in the 1alpha nm process and expects to achieve a certain economy of scale by the end of the year. Micron has no expansion in overall wafer starts this year, and capacity contribution from its A3 fab in Taiwan will likely fall in 2024 at the earliest. Micron also introduced the 1alpha nm process in the second half of 2021 and wafer starts for the 1beta nm process is possible in the first half of 2023, the fastest progress among the big three DRAM manufacturers.
In terms of Taiwanese manufacturers, Nanya is still focusing on the production of Consumer DRAM but, with PC DRAM prices on the decline, overall revenue decreased by 7.4%. Mass production is expected for the 1Anm process by the end of the year but expansion of overall scale will depend on the completion of the company’s new Fab5A in 2025. PSMC’s revenue calculation primarily references standard DRAM products produced in-house and does not include its DRAM foundry business. Revenue in 1Q22 fell by approximately 23%, mainly due to a decrease in the demand for PSMC's own products from major clients. However, if foundry revenue is included, revenue will grow by 3%, bucking trends. Winbond's revenue declined slightly by 4.6%, due to its product mix. Part of its production capacity was migrated to NOR Flash memory, resulting in a recent decrease in DRAM wafer starts. However, since equipment installation will begin at the company’s Kaohsiung Lujhu fab this year, new production capacity is expected to become available gradually in the second half of this year.
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