TrendForce reports that several suppliers, such as Micron and SK hynix, have started scaling back DRAM production The ASP of DRAM plunged 20% in 1Q23, and this price decline is predicted to slow down to 10~15% next quarter It’s uncertain whether or not demand will recover in 2H23 Therefore, the ASP of DRAM has continued to fall as inventory levels are high from the suppliers’ side, and prices will only rebound if there is a significant decrease in production
PC DRAM: Purchase quantity from buyers has fallen drastically over the past three quarters; buyers have around 9~13 weeks of PC DRAM stock remaining Despite suppliers having already cut production in the PC DRAM segment, DDR4 8 GB module is still likely to fall by more than 10% in 2Q23 There is a possibility that PC OEMs may purchase more DRAM because prices have been down to a relatively low level, but it is still under observation whether or not this can mitigate the inventory overstock situation from the suppliers’ side TrendForce predicts the ASP of PC DRAM will fall between 10~15%
Server DRAM: Demand for server DRAM from OEMs and cloud service providers has been sluggish due to inventory adjustments In addition, consumer demand looks less than promising, prompting suppliers to increase the ratio of server DRAMs in their product mixes However, this resulted in a massive inventory pile-up during 1Q23 While most suppliers have lowered their capacity utilization rates, their efforts have yet to make a noticeable impact on declining prices TrendForce predicts that the ASP of server DRAM will fall 13~18% in 2Q23
Mobile DRAM: The DRAM inventories of smartphone brands have returned to a relatively healthy level However, these brands have mostly adopted a conservative plan of action for smartphone production, which means that buyer demand for mobile DRAM will be constrained in 2Q23 As a result, suppliers are under a great deal of pressure to sell off as much stock as possible Even with cutbacks being made in mobile DRAM production, reversing their current overstock will continue to be a challenge for these companies TrendForce predicts the ASP of mobile DRAM to continue falling as we move into 2Q23 Nevertheless, there is a possibility that the decline will shrink to 10~15%
Graphics DRAM: Buyers have been stocking up on graphics DRAM rather conservatively, while even AI has failed to make a considerable impact on demand Taking a mainstream product, the GDDR6 16 Gb, for example, TrendForce predicts ASP will fall 10~15% QoQ in 2Q23 due to constrained demand The DRAM industry is currently in the midst of transitioning from 8 to 16 Gb; Samsung’s GDDR6 8 Gb will reach its EOL at the end of the year Beginning 2024, SK hynix will be the only company still offering 8 Gb products Rolling back production could finally present an opportunity for the price of GDDR6 8 Gb to stop fluctuating aggressively
Consumer DRAM: Demand for networking devices has been relatively stable However, buyers have dialed back their procurement activities as of late given that existing orders have been completed These buyers appear to have conservative estimations of the growth potential of network-related demand this year, and the application market, which includes television, will be unable to support demand for the consumer DRAM market Supply continues to outpace demand even as suppliers reduce their production considerably TrendForce predicts that the ASP of consumer DRAM will fall 10~15% in 2Q23
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Panel makers have aggressively driven down the prices of display driver ICs (DDIs) over the past few quarters in response to slumping panel prices Meanwhile, foundries have not made any significant price adjustments recently Even when Nexchip lowered prices in 2022 to increase their capacity utilization rate, wafer prices remained relatively stable TrendForce’s research has revealed that instead, many foundries have offered deals such as discounts or free wafers to effectively lower DDI prices without officially changing them, since demand is expected to recover in 2H23 As of 1Q23, the prices of large-sized DDIs have been resistant to falling as it’s too difficult for wafer prices to return to their pre-pandemic levels The ASP of DDIs is expected to remain level throughout 2Q23 or dip slightly by 1–3%
TrendForce further iterates that DDIs have faced a long period of strict control over ICs in order to manage inventory levels, which appear to be at a healthy level moving into 2Q23 It was rare to see DDI inventory peak for more half a year in 2022 since most products usually fall to a healthy level in about 8–10 weeks As prices of large-sized DDIs fell significantly by the end of 2022, it’s predicted that panel demand in 2023 will increase QoQ — especially in the third quarter, which has traditionally been the peak season An increase in demand for panels will in turn help drive up demand for DDIs
Taking a look at DDI applications, it’s expected to see demand for panels increase QoQ TV panel prices have rebounded since falling significantly and brands are raring to stock up just in time for China’s 618 Shopping Day and Amazon Prime Day Notebook brands have been gradually replenishing panel inventory for their high-end laptops; gaming LCD monitor panel makers have also adjusted output to keep up with increased demand from Internet cafes reopening in China TrendForce observed that DDI wafer input has increased However, when compared to before the pandemic, all parties within the supply chain have grown more fearful of stockpiling ICs
With that being said, it’s predicted that demand for DDIs will continue to rise QoQ while prices stay relatively the same Demand is expected to peak as we move into the third quarter and since suppliers have become hesitant to stockpile, it may take 2–3 months to prep enough inventory Therefore, TrendForce notes that the question of whether enough stock will be ready in time for the demand peak is still up in the air If there is insufficient supply to meet the demand, or production capacity is not enough to fulfill that excess demand, then DDIs will once again have to cope with being in tight supply in the short term TrendForce does not rule out the possibility that the effects of this could trickle through the entire panel supply chain
For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms Vivie Liu from the Sales Department at graceli@trendforcecom
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TrendForce’s latest investigations reveal that the global NAND Flash market has been facing a demand headwind since 2H22 In response, the supply chain has been scrambling to clear out inventory, driving down NAND Flash contract prices by 20–25% Enterprise SSD took the brunt of the fall with prices plummeting 23–28% Despite manufacturers lowering prices in an attempt to drive up demand, clients are hesitant to purchase more components for fear of overstock As a result, NAND Flash bit shipments rose by a mere 53% as ASP fell 228% Global NAND Flash revenue was reported to be US$1029 billion in 4Q22 — down 25% QoQ
TrendForce reports that Kioxia and Micron saw both a reduction in production and price in 4Q22 Kioxia’s revenue plunged 305% due to weak demand from PC and smartphone clients and data centers readjusting their inventory Micron generated a quarterly revenue of US$11 billion — a staggering 347% QoQ drop — that has led them to drastically decrease their capacity utilization rate for fabs Luckily, Micron was able to ship their 232-layer client SSDs in 4Q22 as scheduled, and with the 176-layer QLC enterprise SSD hot on its heels, Micron’s bit shipments are predicted to steadily improve in 2023 with their revenue climbing gradually quarter by quarter
Samsung has continued to push high-capacity products thanks to their cost advantage, leading to an increase in total bit shipments Nevertheless, they were unable to avoid the drop in ASP, generating revenue earnings of US$348 billion in 4Q22 — down 191% QoQ Samsung continues to hold the top position, retaining 338% of the market share, and currently has no plans to cut back on production Samsung’s competitors in the NAND Flash market have managed to ramp up production in recent years as a result of technological advancements, threatening Samsung’s position as top dog Evidently, this is why while the rest of the industry has slowed down production, Samsung continues to maintain capital expenditure and invest heavily in R&D, all to gain a greater advantage in technology and production capacity
SK Group (SK hynix & Solidigm) has similarly found itself affected by client destocking and the price war, posting a fourth quarter revenue of US$176 billion — down 309% QoQ Nonetheless, their bit shipments saw a quarterly increase of 67%, largely in part to a number of reasons: consumer electronics accounting for a higher percentage of SK hynix’s product portfolio, new smartphone products boosting demand, and enterprise SSDs being shipped on schedule Western Digital (WDC) also reported a 20% increase in bit shipments in 4Q22 despite the sudden dip in prices However, their NAND Flash revenue only hit US$166 billion — down 38% QoQ
NAND Flash revenue will continue to decrease heading into 1Q23 due to traditionally low first quarter
Kioxia, Micron, Western Digital, and SK hynix will continue cutting back on production moving into 1Q23, giving them an opportunity to alleviate their current overstock situation As a result, the drop in NAND Flash ASP should shrink to around 10–15% Unfortunately, given that first quarters are traditionally low because of low client purchasing power, this means growth in client orders will be constrained TrendForce predicts NAND Flash revenue will continue to see a decrease of 81% in 1Q23
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Falling global smartphone production brought about by high inflation and China’s COVID policies resulted in only 446 billion camera modules being manufactured in 2022 However, as the global economy is slowly set to stabilize in 2023, smartphone production is also projected to rise by 09% Furthermore, increased production of camera lenses for budget smartphones means that production of phone camera modules is expected to increase by 36%, reaching a total output of 462 billion units in 2023, according to TrendForce research
Consumers are now, more than ever, prioritizing camera performance when it comes to choosing a smartphone With a maturing smartphone market making it more difficult for phone brands to launch significantly innovative products, smartphone manufacturers have elected to highlight improved camera performance to entice consumers to continue upgrading Smartphone brands such as Samsung, Xiaomi, vivo, and Oppo are set to introduce an advanced periscope camera module in their smartphones that can deliver optical quality Additionally, smartphone manufacturers have been collaborating with iconic and prestigious photography camera brands (eg, Xiaomi and Leica; vivo and ZEISS) to provide customers with the finest image quality and details
When it comes to camera module design, most smartphone brands continue to employ a triple camera setup, with one high-resolution camera and two low-resolution cameras For example, vivo released the v27 in March of 2023, which featured a main 50 MP wide-angle camera, an 8 MP ultra-wide camera, and a 2 MP macro camera Similarly, Xiaomi released the Xiaomi Redmi K60 Pro in January, 2023, which featured a main 54 MP wide-angle camera, an 8 MP ultra-wide camera, and a 2 MP macro camera
Utilizing this particular camera module design allows smartphone manufacturers to maintain triple camera specifications in their phones while minimizing production costs, and allows customers to reap the benefits of a high-performance camera without paying exorbitant prices TrendForce believes this is why triple cameras will continue to be a major design trend in mid-range smartphones Since the main camera bears the most responsibility when it comes to camera performance, smartphone brands will continue to use high-pixel resolution camera lenses, mainly from 49 to 64 MP It has been noted that smartphone brands have been releasing an increasing number of smartphones with even higher camera resolutions For example, Honor released the X8a in February of this year Marketing for this phone heavily focused on its 100 MP main camera as the phone’s selling point Samsung also equipped their mid-range Galaxy A73 5G with a 108 MP main camera, demonstrating that smartphone manufacturers are gearing towards significantly upgrading the pixel resolution of their main cameras
TrendForce reports that smartphone manufacturers will continue to focus on improving rear camera performance when it comes to upgrading smartphone hardware, promoting their phones’ picture and video taking capabilities, and highlighting special features such as night or astrophotography mode To achieve these performance upgrades, manufacturers will need to not only strengthen the optical performance of their camera modules, but utilize AI algorithms and software to improve image quality
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
According to TrendForce’s latest survey of the global foundry market, electronics brands began adjusting their inventories in 2Q22, but foundries were unable to rapidly adapt to this development because they reside in the more upper portion of the supply chain Moreover, revising procurement quantities of long-term foundry contracts takes time as well Hence, only some tier-2 and -3 foundries were able to immediately respond to the changes in their clients’ demand Also, among them, 8-inch wafer foundries made a more pronounced reduction in their capacity utilization rates As for the remaining foundries, the downward corrections that they made to their capacity utilization rates did not become noticeable until 4Q22 Hence, in 4Q22, the quarterly total revenue of the global top 10 foundries registered a QoQ decline for the first time after 13 consecutive quarters of positive growth The quarterly total revenue of the top 10 foundries came to US$33,530 million, reflecting a drop of 47% from 3Q22 Moving into 1Q23, TrendForce projects that the quarterly total revenue of the top 10 will show an even steeper drop on account of seasonality and the uncertain macroeconomic situation
Although TSMC and GlobalFoundries Actually Managed to Raise Revenue Market Share in 4Q22, Top Five Foundries All Inevitably Faced Massive Reduction in Orders
In 4Q22, foundries’ revenues were affected by an underwhelming peak season and their customers’ inventory corrections Even with stock-up activities related to new iPhones and Android smartphones, TSMC still posted a QoQ drop of 10% in revenue to reach US$19,962 million However, TSMC’s revenue market share climbed to almost 60% mainly because tier-2 and -3 foundries took a heavier hit with respect to customers’ inventory corrections Competitors’ weaker performances thus allowed TSMC to gain market share Regarding the revenues from TSMC’s process technologies, the decline in the revenues from the 7/6nm nodes was mostly offset by the rise in the revenues from the 5/4nm nodes The share of the ≤7nm nodes in TSMC’s overall revenue remained stable at 54%
Turning to Samsung, it experienced a drop in orders for advanced processes and a general demand contraction as its customers were concentrating on inventory reduction However, the demand drop associated with these factors was marginally offset by stock-up activities related to the components for the new iPhones and Android smartphones All in all, Samsung posted a QoQ drop of 35% in foundry revenue to reach US$5,391 million for 4Q22 TrendForce also points out that Samsung has lost a significant amount of demand for its ≤7nm nodes as Qualcomm and NVIDIA made the decision to reallocate orders for chips used in flagship hardware products Currently, there are no new major customers that can effectively address the idling production capacity caused by the order reallocation Therefore, the utilization rates of Samsung’s advanced processes are projected to remain at a low level of around 60% through 2023 In sum, Samsung lacks the momentum to achieve a positive YoY revenue growth for this year
Regarding other the major foundries, UMC saw a drop in both capacity utilization rate and wafer shipments in 4Q22, so its revenue fell by 127% QoQ to US$2,165 million In the aspect of wafer size and process technology, UMC saw a QoQ revenue decline for both 12- and 8-inch wafer foundry services, and its 035/025μm nodes had the worse revenue performance with a QoQ decline coming to 47% Conversely, in the case of GlobalFoundries, its revenue actually rose by 13% QoQ to US$2,101 million thanks to the optimization in its ASP and product mixes, as well as an increase in revenue from its non-wafer business GlobalFoundries was the only one among the top 10 to record a positive QoQ growth, and its revenue market share also climbed to 62% Turning to SMIC, it also saw a drop in both wafer shipments and wafer ASP As a result, its revenue slid by 150% QoQ to US$1,621 million Looking at SMIC’s revenue by application or production category, the sharpest drops were experienced by chips related to smart home and consumer electronics To get its customers to raise wafer input, SMIC has been offering price concessions However, this aggressive pricing strategy has not been particularly effective as customers are concerned about the risks associated with the US-China trade dispute Therefore, SMIC’s capacity utilization rate and revenue are expected to shrink further in 1Q23
Downturn of Display Panel Industry Led to Significant Revenue Drop for VIS and Nexchip, and the Latter Exited Top 10 Group
TrendForce notes that the extent of the impact from order cuts varied for individual foundries in 4Q22 Consequently, there were two notable changes in the quarterly revenue ranking from sixth to 10th place First, Nexchip fell out of the top 10 group and will unlikely return in the short term DB Hitek filled in the 10th place vacated by Nexchip in 4Q22 However, its capacity utilization rate dropped to 80-85% due to the recent market downturn DB Hitek posted a QoQ drop of around 124% in revenue to reach US$292 million Second, Tower, which was in ninth place in the 3Q22 ranking, benefited from the stable demand for chips based on specialty process technologies and a relatively steady flow of orders from European clients during 4Q22 Tower posted a marginal QoQ decline of 56% in revenue to reach US$403 million, and this result enabled it to surpass VIS to take eighth place in the 4Q22 ranking Conversely, VIS was impacted by the downturn of the display panel industry and the slumping demand for consumer electronics in 4Q22 With a QoQ decline of around 30% in wafer shipments, VIS also recorded a QoQ drop of 303% in revenue to reach US$305 million Because of this performance, VIS slipped to ninth place in the ranking
HuaHong Group benefited from the domestic demand for its specialty processes in 4Q22, but the same period also saw strong market headwinds that weakened the demand for logic ICs All in all, HuaHong’s overall revenue for the quarter fell by 265% QoQ to US$882 million Before this drop, HuaHong had maintained positive QoQ revenue growth for two straight years Lastly, looking at PSMC’s performance in 4Q22, capacity utilization rate slid significantly for both 8- and 12-inch wafer foundry Consequently, PSMC posted a QoQ decline of 273% in foundry revenue to reach US$408 million With this result, PSMC has recorded QoQ revenue drop for three consecutive quarters Its revenue market share also shrank to just 12% in 4Q22
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
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