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Press Releases
Demand Remains Weak as Inventories Continue Moving Higher, DRAM Pricing Forecast to Drop by 3~8% in 3Q22, Says TrendForce

2022/06/20

Semiconductors

According to TrendForce research, despite the significance of peak season and rising DDR5 penetration, the 3Q22 DRAM market still succumbed to the negative impact of weak consumer electronics demand resulting from the Russian-Ukrainian war and high inflation, which in turn led to an increase in overall DRAM inventory This is the primary reason for a 3-8% drop in DRAM prices in 3Q22 and a more than 8% pricing dip in certain DRAM products for PCs and smart phones cannot be ruled out In terms of PC DRAM, sustained weakening of demand has led to PC OEMs adjusting their annual shipment targets and also caused DRAM inventories to soar rapidly In 3Q22, PC OEMs remain focused on adjusting and destocking DRAM inventories, making a rebound in purchasing momentum unlikely At the same time, since the overall DRAM industry remains oversupplied, even if PC demand is sluggish, suppliers still experienced difficulties in reducing their PC DRAM supply, resulting in a slight quarterly increase in the number of supplied bits Therefore, PC DRAM pricing is forecast to drop by 3~8% In terms of server DRAM, current client inventory levels of 7-8 weeks is slightly high, and though direct sales is currently the server field’s primary distribution channel, clients’ bit demand is still not enough to fully consume the bit output derived from increased wafer input and process advancement In addition, demand for consumer PC DRAM and mobile DRAM is uncertain in 2H22, forcing suppliers to transfer production capacity to server DRAM As a result, suppliers have to adopt certain sales strategies such as two quarter price binding or increasing on hand inventory to suppress price declines Server DRAM is forecast to drop by another 0~5% in 3Q22 In terms of Mobile DRAM, as sales in the consumer market fail to meet expectations, suppliers are forced to incrementally reduce the proportion of mobile DRAM production quarter by quarter and switch to server DRAM, thereby stabilizing market inventory and prices However, the supply of mobile DRAM bits did not drop significantly due to the increased manufacturing In addition, average memory installed per machine failed to increase significantly, resulting in continued oversupply and expanding price decline to 3~8% compared to 2Q22 TrendForce also indicates, bit shipments were limited due to sluggish demand for smartphones in 2Q22 and the urgency of smartphone brands to deplete inventory Under pressure from both revenue and inventory, pricing will see greater flexibility and suppliers will strive to negotiate pricing on some orders before the end of June to alleviate their inventory concerns In terms of Graphics DRAM, as buyers face increasing inventory and uncertain subsequent demand from distributors, the market's stocking momentum has become weak Although Micron only retained a sporadic supply of GDDR6 8Gb in 3Q22, the current graphics DRAM supply is secure due to increased production volume from Korean manufacturers and the weakening of demand, which caused prices to drop marginally by 0~5% in 3Q22 TrendForce believes that weak demand is a key inhibitor of rising graphics DRAM pricing this quarter However, if suppliers see that a price drop in 3Q22 will not stimulate demand, they will try to keep prices as flat as possible In terms of consumer DRAM, the purchasing of consumer electronics has been adversely affected by factors such as the Russian-Ukrainian war, China's pandemic lockdowns, and rising inflation Consumer DRAM-related applications such as notebook and TV shipments are facing downward revision In addition, since DDR3 is at a relatively high point, pressured by inventory and cost, buyers’ purchasing power has obviously weakened Demand for DDR3 and DDR4 is forecast to decline simultaneously and market stocking momentum will continue to weaken Korean manufacturers’ plans to withdraw from DDR3 supply remains unchanged but, in 2H22, Chinese and Taiwanese companies will continue to create new production capacity With weaker demand and increased supply, sellers lose their bargaining advantage, making consumer DRAM prices difficult to support in 3Q22 DDR3 and DDR4 prices are forecast to drop by 3-8% QoQ 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 For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/ The Webinar, ”COMPUFORUM 2022 Webinar: Diverse Market Opportunities Generated by Applications of Cyber-Physical Systems” will start from June 15, 2022 The TrendForce research team including Mark Liu, Caron Ju, Bryan Ao, and Alex Chen will present speeches regarding memory, servers, and datacenters, respectively 【Info】 When:Wednesday, June, 15 Where:COMPUFORUM 2022 Webinar (Free to access)

Press Releases
Demand for Consumer Electronics Weak, Supply Chain Shortages Ease in 1H22, Says TrendForce

2022/04/12

Semiconductors / Consumer Electronics

According to TrendForce, the consumer electronics market will feel the brunt of the weakening stay-at-home economy, the pandemic in China, international tensions, and rising inflation in 1H22 Coupled with the traditional off-season, demand for relevant applications such as PCs, laptops, TVs, and smartphones has cooled significantly and downstream customers have successively downgraded their shipment targets for the year, while demand for automotive, Internet of Things, communications, and servers products remain good At the same time, the supply chain will build higher inventories in general to mitigate the risk of material shortages due to transportation impediments induced by the spread of the pandemic and the ongoing war between Russia and Ukraine 1 Foundries Due to the prolonged lead-time of semiconductor equipment and limited new capacity in 1Q22, the overall foundry capacity utilization rate remains fully loaded, in particular, component mismatch issues continue for parts produced at mature nodes (1Xnm~180nm) Looking forward to the second quarter, although growth in global wafer production capacity remains limited, due to weak demand for end products, continuing international tension, and China's forced lockdowns and supervision due to the recent spread of the pandemic, there is an opportunity for the supply chain to obtain a more adequate supply of wafers that were previously squeezed by production capacity 2 Servers The overall supply of key server materials improved slightly in 1Q22 In addition, due to increasing orders from ultra-large data centers, the general supply cycle of NetCom chips such as LAN IC/chip remains as long as approximately 40 weeks but the demand gap can be bridged by instituting urgent order fees, mitigating actual impact As the aforementioned situation eases, additional orders for ODM motherboard production are moving briskly, prompting continued stocking of FPGAs and PMICs materials NetCom chips are also overstocked and the overall market has a reached a "rich get richer" mindset Material shortages at second-tier ODMs still stifle the production of motherboards for a small number of customers but does not affect the overall server market supply With improvements in material supply, server shipments will increase significantly in 2Q22, growing an estimated 158% QoQ to 36 million units 3 Smartphones Affected by sluggish seasonal demand, the Russian-Ukrainian war, and rising inflation, market demand has cooled Thus, material delivery issues in the supply chain have eased compared to 2H21 Although there is still a shortage of certain components, most of these shortages are concentrated in mid/low-end smartphone products The lead time for 4G and low-end 5G SoCs is approximately 30 to 40 weeks, which is limited by production capacity planning Since last year, the demand of the mid/low-end mobile phone market has not been met This is followed by A+G sensors with a lead time of approximately 32~36 weeks and OLED DDIC and Touch IC with a lead time of 20~22 weeks The production volume of smartphones in 2Q22 will be affected by the interaction of the aforementioned factors with a forecast production volume of 323 million units, or only 6% QoQ, which is lower than the performance of previous years 4 Notebooks Also affected by weakening end market demand, discounting client SSDs that are no longer oversupplied, Type C IC, WiFi, and PMIC all currently boast long lead times, with Type C IC the lengthiest at 20~25 weeks However, compared with TrendForce’s assessment at the beginning of this year, the delivery cycle has not grown longer, so the lead time of these three types of products is expected to improve by the end of 2Q22 As supply chain backlog continues to improve, shipments of notebook computers (including Chromebooks) is expected to reach approximately 551 million units in 2Q22, down 07% QoQ 5 MLCC Passive Components From the perspective of other key components, taking MLCC as an example, demand for major consumer electronic products such as mobile phones, laptops, tablets, and TVs declined significantly in 1Q22, resulting in high consumer product specification MLCC inventory levels held by original suppliers and channel agents and this situation may continue into 2Q22 At present, the stocking momentum for automotive and industrial MLCCs has steadily increased, while consumer specification products have yet to escape the pattern of oversupply In 2Q22, the MLCC market has the opportunity to alleviate its component mismatch issues through gradually increased production capacity and automotive and server ICs supplied by semiconductor IDM companies, driving stocking momentum at automotive power, server, fast charging, and charging/energy storage equipment OEMs Vehicle and industrial MLCCs have the opportunity to become primary growth drivers in 2Q22 with Murata, TDK, Taiyu and Yageo as the primary beneficiaries Consumer specification products, which account for the bulk of MLCC production from suppliers in Taiwan, South Korea, and China, may face continued market demand weakness in 2Q22 due to a slowdown in demand for mobile phones and laptops and continuing inventory adjustment by branded companies and ODMs Looking forward to 2Q22, not including servers, demand for end products related to the consumer category remains weak Components that were originally oversupplied will face more severe price tests due to the imbalance between supply and demand In terms of materials in serious short supply, more output will be transferred to products with strong demand through the deployment of internal production capacity TrendForce believes that from the changes in PC market conditions, it can be seen in rapid changes in demand, purchasing behavior has quickly switched from the former over-ordering strategy to actively cutting orders, inducing supply chains to buck the seasonal trends of previous years Due to the accelerated recent spread of Omicron in China and under the country’s dynamic zero-COVID policy, mandatory and sudden lockdown and control measures may cause local manufacturers to face multiple and complex supply chain problems, which will be detrimental to market performance 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 For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/

Press Releases
DDR3 Consumer DRAM Prices Expected to Rise by 0-5% in 2Q22 Due to Rapidly Shrinking Supply, Says TrendForce

2022/03/07

Semiconductors

Intel and AMD will be releasing new CPUs that support DDR5 DRAM solutions for PCs and servers this year In response, the DRAM industry led by South Korean suppliers is developing solutions to complement the arrival of the new CPUs In the midst of the gradual shift to DDR5, DRAM suppliers will also scale back the supply of DDR3 solutions, according to TrendForce’s latest investigations With Korean suppliers accelerating their withdrawal from DDR3 production, Taiwanese suppliers yet to kick off mass production using newly installed capacities, and Chinese suppliers falling short of their expected yield rate, the global supply of DDR3 solutions will undergo an impending decline With respect to the demand side, however, not only has the supply of networking chips been ramping up, but material shortage issues are also gradually easing As such, buyers are now procuring DDR3 solutions ahead of time, resulting in a tight supply and demand situation in the DDR3 market TrendForce therefore expects DDR3 DRAM prices to recover from a bearish first quarter and undergo a 0-5% QoQ increase in 2Q22 On the supply side, Samsung and SK hynix have begun scaling back their DDR3 production while also planning to declare EOL (end of life) for their DDR3 offerings, such as 1/2Gb and 4Gb chips It should be noted, however, that Micron’s DDR3 solutions will not reach EOL even by 2026, meaning the company will still offer DDR3 solutions long after its two Korean competitors have stopped doing so, according to TrendForce’s understanding Also worth noting is that Micron is migrating its DDR3 production to a US-based fab that mainly manufactures specialty DRAM solutions Nevertheless, since this fab’s production capacity will be divided between products for consumer and automotive applications, TrendForce believes that the aforementioned migration will tighten Micron’s supply of consumer DRAM solutions because the US fab will give priority to automotive DRAM solutions that offer a higher gross margin and are currently enjoying surging demand Although Taiwan-based DRAM suppliers that focus on promoting DDR3 solutions, namely, Nanya Tech and Winbond, are in the process of capacity expansion, their new production lines will not be operational until 2023-2024 Hence, the contribution from the newly added capacities is not expected to drive up DDR3 supply substantially this year Chinese suppliers, including CXMT and GigaDevice, are continuing to collaborate in DDR3 development, though their capacity increases and yield rate improvements have both fallen short of market expectations After being added to the Entity List, JHICC, yet another China-based DRAM supplier, is now dealing with severe restrictions with respect to procuring equipment, making it difficult for JHICC to raise its wafer input Furthermore, the company has no spare resources that can be allocated to R&D and pilot runs As a result, JHICC still primarily manufactures DDR4 4Gb chips at its initial 25nm node, with no DDR3 production at the moment With regards to demand, DDR3 consumer DRAM is primarily used in end-devices such as STBs and networking products (eg, GPON, routers, and modems), which do not require high-performance SoCs While the foundry industry suffered a severe shortage of wafer capacities allocated to logic ICs in 4Q21, production capacities for relatively low-margin chips were noticeably impacted in turn Along with a preexisting component mismatch situation, most manufacturers found themselves unable to assemble end-devices Moving into early 2022, however, the supply of certain materials, including those used in foundry operations, saw a gradual improvement As various components needed for device manufacturing became available after Lunar New Year, certain buyers have once again kicked off their consumer DRAM procurement activities In addition, DRAM spot prices shifted from a prior decline to a strong upturn at the end of last year as the Chinese government ordered a month-long lockdown in Xi’an The ensuing price hike, which has lasted for two months, subsequently led buyers to procure even more DRAM ahead of time in anticipation of further price hikes Hence, although the demand for end-products has yet to make a full recovery, buyers are now slowly and steadily procuring consumer DRAM in order to avoid either higher upcoming prices or even an inability to secure consumer DRAM inventory 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 For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/

Press Releases
Overall DRAM Output Decreased Nearly 6% QoQ in 4Q21 Due to Decline in Shipments and Pricing, Says TrendForce

2022/02/17

Semiconductors

The pandemic has impeded the supply of many end-user devices such as smartphones, servers, PCs, and niche consumer electronics components, indirectly leading to a decline in a willingness on the procurement-end to stock relatively abundant memory chips, according to TrendForce research This is most obvious in the stance of PC OEMs holding more than 10 weeks or more of DRAM inventory Therefore, most DRAM fabs experienced a drop in shipments in the fourth quarter of 2021 and declining purchasing momentum has also led to a downward trend in DRAM price quotations Total 4Q21 DRAM output value decreased by 58% QoQ, reaching US$2503 billion, with only a few suppliers such as SK hynix bucking this trend Looking forward to 1Q22, although material shortages for some components can be alleviated, the first quarter is already an off season for demand and buyers’ inventories are still flush Thus, the purchasing-side will largely concentrate on destocking, with overall purchasing momentum remaining sluggish Thus, DRAM pricing in the first quarter of this year is expected to face greater pressure than in the fourth quarter of last year and overall DRAM output value may fall further 4Q21 DRAM price drop causes downturn in manufacturer profit levels In terms of revenue performance, price quotations from the three major DRAM manufacturers all declined with slightly differing shipments trends Shipments from both Samsung and Micron fell due to poor end-user demand, with revenue down 9% and 8%, respectively In terms of market share, Samsung dropped slightly to 423% while still ranking first, SK hynix climbed to nearly 30%, ranking second, and Micron dropped slightly to 223%  Pricing gaps between these three DRAM manufacturers in 1Q22 is expected to be narrow, but since SK hynix had a relatively high base period of shipment in the 4Q21, the company expects a decline in its shipments slightly higher than the industry average which will reduce its 1Q22 market share slightly In terms of profit performance, the operating profit margins of Samsung, SK hynix, and Micron (September-November financial reporting) fell to 50%, 45%, and 41%, respectively, due to the cost optimization resulting from an increase in the proportion of advanced processes not being  enough to make up for the decline in price quotations TrendForce believes that the downturn trend in profit margins is likely to intensify in 1Q22 and DRAM suppliers will face sharper profit decline Manufacturers can only increase the proportion of advanced processes and optimize their product portfolio to reduce the impact brought on by price pressure  Specialty DRAM market conditions also weak in 4Q21, with Taiwanese manufacturer revenue falling as well As the demand for specialty DRAM end-user applications such as TVs and consumer electronics products dropped significantly in 4Q21, coupled with the impact of material shortages in the supply chain, client demand for DRAM shipments also cooled substantially The 4Q21 specialty DRAM price decline was also comparable to that of mainstream products, in turn impacting the revenue performance of Taiwanese manufacturers focused mainly on the consumer market From the perspective of Nanya Tech, the combination of falling volume and price reduced its revenue in 4Q21 by approximately 10%, while its operating profit rate fell to 375% due to the decline in price quotations Winbond's small-capacity (1/2Gb) market was also affected by components mismatch issues, but the impact was relatively small and its 4Q21 revenue fell slightly by close to 4% PSMC’s (revenue calculation is primarily based on its self-produced standard DRAM products and does not include its DRAM foundry business) revenue fell slightly by approximately 1% If its foundry revenue is added, then its revenue grew by 6%, reversing a downward trend This demonstrates that locking-in long-term contracts early is a good strategy Faced with reversal in the DRAM market, it is TrendForce’s understanding that the solutions of the three major Taiwanese manufacturers are as follows: Nanya Tech can allocate 20nm production capacity to produce DDR3 (better gross profit) when DDR4 market conditions are poor and invest more resources in the research and development of new 1X nm processes  If yield improves rapidly, this will provide some contribution before the completion of its new factory in 2024 In addition to continuing to focus on niche small-capacity products, Winbond is also strengthening research and development of 25 nm and next-generation 20 nm products, expected to be introduced directly when its Kaohsiung Lujhu factory starts mass production As for PSMC, by locking clients into long-term contracts, it can plan 2022 production in advance and continue to maximize its greatest advantages In accordance with market conditions and gross profit levels, it will allocate production capacity between logic IC and memory products 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 For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/

Press Releases
NAND Flash Pricing Set to Spike 5-10% in Q2 Due to Material Contamination at WDC and Kioxia, Says TrendForce

2022/02/10

Semiconductors

WDC recently stated that certain materials were contaminated in late January at NAND Flash production lines in Yokkaichi and Kitakami, Japan which are joint ventures with Kioxia, according to TrendForce’s investigations Before this incident, TrendForce had forecast that the NAND Flash market will see a slight oversupply the entire year and average price from Q1 to Q2 will face downward pressure However, the impact of WDC’s material contamination issue is significant and Samsung’s experience during the previous lockdown of Xi'an due to the pandemic has also retarded the magnitude of the NAND Flash price slump  Therefore, the Q1 price drop will diminish to 5~10% In addition, according to TrendForce, the combined WDC/Kioxia NAND Flash market share in the 3Q21 was as high as 325% The consequences of this latest incident may push the price of NAND Flash in Q2 to spike 5~10% The contaminated products in this incident are concentrated in 3D NAND (BICS) with an initial estimate of 65exabytes (approximately 6,500M GB) affected According to TrendForce, damaged bits account for 13% of the group's output in 1Q22 and approximately 3% of the total output for the year The normal production schedule for the entire line has yet to be confirmed It is worth noting that the damages announced by WDC likely do not account for total losses stemming for this event and the number of damaged Kioxia parts has not been aggregated, so the total number of affected bits may increase further Production primarily focused on Client SSD and eMMC, subsequent spot pricing may climb Currently, WDC and Kioxia are focused on supplying PC client SSD and eMMC products Since WDC is the number two and number one supplier in the client SSD and eMMC markets, respectively, subsequent supply will inevitably be hampered Therefore, even if production demand for PC OEM is revised downward in Q2, client SSD prices may remain resistant to decline In terms of enterprise SSD, Kioxia PCIe 40 has been verified by a number of customers and the company's market share in 2022 was originally forecast to increase However, this incident will impact Kioxia’s ability to ship product and further affect subsequent customer procurement Therefore, in order for buyers to satisfy their own production requirements, a Q2 decline in enterprise SSD product pricing will be largely restrained In addition, as buyers and sellers in the spot market are still clarifying events and incident assessments, they mostly responded by suspending quotations, with no new quotations having been generated However, TrendForce’s assessment indicates that subsequent events will obviously stimulate spot price appreciation Judging from contract pricing, any orders negotiated on a whole quarter basis should be unaffected in the near-term but there may be an immediate price increase in wafer quotations this February and March 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 For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/

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