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Press Releases
DRAM Prices for 3Q21 Projected to Undergo Minor QoQ Increase of 3-8% Owing to Rising Demand from Peak Season, Says TrendForce

2021/07/13

Semiconductors

As third quarters have typically been peak seasons for the production of various end-products, the sufficiency ratio of DRAM is expected to undergo a further decrease in 3Q21, according to TrendForce’s latest investigations However, DRAM buyers are now carrying a relatively high DRAM inventory due to their amplified purchases of electronic components in 1H21 The QoQ increase in DRAM contract prices are hence expected to slightly narrow from 18-23% in 2Q21 to 3-8% in 3Q21 Looking ahead to 4Q21, TrendForce believes that DRAM supply will continue to rise, thereby leading to either a further narrowing of price hikes or pressure constraining the potential price hike of DRAM products PC DRAM prices are expected to rise by 3-8% QoQ due to continued constraints on production capacities From the perspective of demand, the stay-at-home economy has resulted in persistently high demand for notebook computers Although discrepancies still exist among notebook brands’ inventory levels of various components, these brands are still making an aggressive attempt at maximizing their production of notebooks However, as most of these brands are still carrying about 8-10 weeks’ worth of PC DRAM inventory (which is relatively high), PC DRAM purchasing strategies from the buyers’ side will therefore remain relatively conservative From the perspective of supply, due to the rising demand for server DRAM, the production capacity allocated to PC DRAM is still in a severe supply crunch Hence, DRAM suppliers are firm in their attitudes to raise PC DRAM quotes, and TrendForce expects the price negotiations between PC DRAM buyers and suppliers in 3Q21 to become both lengthier and more difficult as a result, with contract prices likely finalized at the end of July Even so, what is now certain is that both sides have reached some level of understanding regarding the ongoing price hike of PC DRAM products TrendForce forecasts a 3-8% increase in PC DRAM contract prices for 3Q21 QoQ increase in server DRAM prices for 3Q21 are expected to narrow to 5-10% due to buyers carrying a relatively high inventory With regards to demand, in spite of the minor increase in the shipment of whole servers, server DRAM buyers are less aggressive in their server DRAM procurement compared to the previous quarter For instance, CSPs in North America and in China are currently carrying more than eight weeks of server DRAM inventory In other words, procurement activities for server DRAM will gradually decline in the coming quarters in accordance with market demand Notably, some Tier 2 clients will continue to procure server DRAM in 3Q21 since they did not sufficiently stock up in the prior quarters, and this demand will likely result in upward momentum for server DRAM prices With regards to supply, the three major DRAM suppliers (Samsung, SK Hynix, and Micron) are limited by the fact they are currently carrying a relatively low inventory of server DRAM As such, these suppliers will attempt to maintain their profitability by increasing prices each quarter It should also be pointed out that the decreased DRAM demand from smartphone brands has in fact allowed more wiggle room for server manufacturers to negotiate for more favorable server DRAM prices TrendForce thus believes that, before the supply side and demand side can reach an agreement, negotiations for server DRAM prices will become increasingly lengthy, and that server DRAM contract prices for 3Q21 will likely increase by 5-10% QoQ once negotiations are finalized Mobile DRAM prices are expected to defy market realities and increase by 5-15% QoQ, with potential risks of high price and low demand In terms of demand, certain smartphone brands are now carrying a relatively higher inventory of mobile DRAM owing to Southeast Asia’s worsening COVID-19 pandemic, which led smartphone brands that primarily manufacture and sell their products there to begin lowering their production targets in 2Q21 In addition, some smartphone brands have set overly ambitious production targets; combined with the current shortage of foundry capacities, the discrepancies among the supply of smartphone components have now become more apparent, in turn forcing brands to slow down their mobile DRAM procurement in order to adjust their component inventories first Demand has remained strong from clients in the smartphone market since 4Q21, so the supply fulfillment rate of the three major DRAM suppliers for their smartphone clients will be consistently higher compared to clients in other markets As DRAM demand from non-smartphone applications ramps up and results in higher profitability than mobile DRAM, the three major DRAM suppliers will continue to adjust their production capacities in accordance with the shifting supply and demand from various segments, thus resulting in an increasingly constrained supply of mobile DRAM It should be pointed out that DRAM market leader Samsung has generally tried to minimize the profit discrepancies among its various products Furthermore, the price hike in Samsung’s mobile DRAM products was relatively lower compared to Micron in 1H21 As a result, in view of the weakening mobile DRAM demand in 3Q21, Samsung will increase its mobile DRAM prices to a more notable extent compared to its US competitors Going forward, Samsung’s price hike will lead its competitors to retool their pricing strategies, subsequently leading to an even wider price increase across the entire mobile DRAM market As such, TrendForce expects mobile DRAM prices to increase by 5-15% QoQ in 3Q21, which is a step up compared to 2Q21 On the other hand, this price hike against market realities may potentially lead to a further decline in mobile DRAM demand, resulting in a situation with high price and low demand Graphics DRAM prices are expected to increase by 8-13% QoQ due to tight supply of GDDR6 Regarding graphics DRAM demand, many cryptocurrency miners were previously intent on mining ETH with older graphics cards as it reached peak prices Nevertheless, the recent bearish turn of the cryptocurrency market has indirectly had an impact on demand for graphics cards equipped with GDDR5, although most of this impact primarily affected the spot market For the contract market, more than 90% of graphics DRAM applications have migrated to GDDR6 products, which are now in short supply since new graphics cards are equipped with GDDR6 memory and are in high demand In addition, the vast majority of GDDR6 stock from DRAM suppliers is currently cornered by graphics card manufacturers and game console manufacturers, thereby further limiting the graphics DRAM supply available to small and medium OEMs/ODMs Regarding graphics DRAM supply, although GDDR6 accounts for more than 90% of the three major DRAM suppliers’ graphics DRAM production, demand for GDDR6 still far exceeds supply because end product demand has also migrated to GDDR6 As orders for server DRAM gradually ramp up in 3Q21, DRAM suppliers will prioritize fulfilling demand from the server market first Hence, graphics DRAM contract prices for 3Q21 are expected to increase by 8-13% QoQ Consumer DRAM prices are expected to increase by up to 13% QoQ in light of strong demand At the moment, consumer DRAM demand is relatively robust from the consumer electronics market and the telecom market In addition, as China has been accelerating its build-out of 5G infrastructures and its rollout of WiFi 6 in the post-pandemic era, the overall demand for consumer DRAM remains strong going forward On the other hand, the three dominant DRAM suppliers are slowing down their transition of production capacities from DDR3 products to CMOS Image Sensors or other Logic IC products now that the consumer DRAM market has taken a bullish turn However, in the medium-to-long term, the general trend in the DRAM industry will still point to the elimination of the older 25/20nm process technologies and the continued migration towards more advanced 1Znm and 1αnm processes As a result, given DDR3 products’ declining supply and strong demand, DDR3 prices for 3Q21 are expected to increase by 8-13% QoQ, while DDR4 prices are expected to undergo a minor growth of 3-8% QoQ in accordance with mainstream PC and server DRAM prices 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
Graphics DRAM Contract Prices Projected to Rise by 8-13% QoQ in 3Q21 Due to Tight Supply in Contract Market, Says TrendForce

2021/06/09

Semiconductors

TrendForce’s latest investigations find considerable discrepancy between prices for graphics DRAM products in the contract market and in the spot market Quotes for graphics DRAM products continue to rise in the contract market as the severe undersupply situation persists Furthermore, the supply fulfillment rates for orders from some medium- and small-size clients have been hovering around 30% This undersupply situation is expected to persist through 3Q21, during which graphics DRAM contract prices are expected to rise by 8-13% QoQ Regarding the spot market, on the other hand, the value of ETH experienced continued uptrend from the start of 2021 until May, thereby driving up the demand for graphics cards, regardless of them belonging to the newer or older series At the height of the graphics card boom, spot prices of graphics DRAM products were up to 200% higher than contract prices Demand from miners for graphics cards are expected to be relatively muted before cryptocurrencies return to their previous bullish trends, and the gap between the spot and contract prices of graphics DRAM products will likely narrow in 3Q21 as a result TrendForce expects four key factors to continue driving up graphics DRAM prices in the contract market First of all, demand in the PC market remains high, particularly for gaming products Secondly, DRAM suppliers' production capacities allocated to most clients are constrained by the fact that Nvidia bundles its GPUs with graphics DRAM, meaning DRAM suppliers have prioritized capacity allocation to Nvidia as opposed to smaller clients Thirdly, both the Xbox Series X and PS5 are equipped with GDDR6 16Gb chips, which is different from GDDR6 8Gb chips As the two chips are non-interchangeable, once DRAM suppliers commit their production capacities for one, they can no longer produce the other using the same batch of wafers Finally, since there has been a resurgence of server DRAM orders, DRAM suppliers are still prioritizing the production of these products as they are a mainstream market product As various products each compete over limited DRAM production capacities, graphics DRAM contract prices are expected to undergo an increase going forward In particular, medium- and small-size OEMs/ODMs may likely face double-digit percentages increases Sharp drop in values of cryptocurrencies has caused spot prices of GDDR5 and GDDR6 products to fall Regarding the spot market, although spot prices for GDDR6 products has been undergoing a slight drop since May, they are still nearly 100% higher than the average contract prices Conversely, there is almost no difference between spot and contract prices for GDDR5 products Looking at the reasons behind the slide in spot prices of graphics DRAM products, a sharp drop in the values of cryptocurrencies is the most significant contributor apart from the excessively large difference between spot and contract prices The recent bearish movement of cryptocurrencies has resulted in a sharp drop in incentives for miners In turn, this has led to a corresponding drop for older graphics (such as the Nvidia GTX 1660, which features GDDR5 DRAM), which have no other sources of demand GDDR5 prices hence entered a significant decline With regards to newer graphics cards, however, there is still a baseline level of demand for them thanks to purchases by gamers Furthermore, these newer graphics cards, much like the new generation of game consoles, feature GDDR6 DRAM Therefore, due to the current demand for GDDR6 products, their price drop in the spot market is lower compared to GDDR5 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
Memory Prices Likely to Continue Rising in 3Q21 as Suppliers Keep a Low Level of Inventory, Says TrendForce

2021/06/08

Semiconductors

Memory suppliers are currently carrying a relatively low level of inventory because of aggressive stock-up activities of clients across different application segments in 1H21, according to TrendForce’s latest investigations More specifically, inventories of DRAM suppliers and NAND Flash suppliers are averaging 3-4 weeks and 4-5 weeks, respectively The overall procurement of server memory products is expected to intensify in 3Q21, so memory suppliers do not see the necessity in lowering quotes to drive sales TrendForce forecasts that DRAM prices will rise further by 3-8% QoQ for 3Q21 On the other hand, thanks to the growing demand for enterprise SSDs and NAND Flash wafers, TrendForce has also corrected up the magnitude of the QoQ increase in NAND Flash prices for 3Q21 to 5-10% (compared with the previous projection of 3-8%) High inventory may pose potential risk for smartphone brands in 2H21 due to decreased smartphone production targets Under the market spotlight are smartphone brands and notebook manufacturers, which drastically differ in their inventory levels Regarding the smartphone market, TrendForce has already lowered the YoY growth rate of the global total smartphone production in 2021 to 85% from the previous projection of 94% as the second wave of the COVID-19 pandemic takes place across India Presently, smartphone brands are carrying 8-10 weeks of inventory on average for DRAM and NAND Flash Two newly emerged factors are generating some concerns about the high level of inventory First, Chinese brands have lowered their production targets and begun to adjust inventories in order to address the issue of component gaps Second, Southeast Asia is bracing for a resurgence of COVID-19 outbreaks that could disrupt smartphone production and weaken consumer demand PC OEMs are holding up to 10 weeks’ worth of DRAM inventory on average; price hike of PC DRAM in 2H21 will likely be limited as a result Regarding the notebook market, on the other hand, PC OEMs are currently carrying about 8-10 weeks’ worth of DRAM inventory on average, with some PC OEMs having an even higher inventory level, primarily because the stay-at-home economy this year will continue to propel the demand for notebook computers, about 238 million units of which are expected to be produced this year, a 143% increase YoY Furthermore, in view of the shortage of components in the upstream supply chain, including audio CODECs, analog ICs, power ICs, MCUs, and LED drivers, PC OEMs are anticipating that DRAM will be in similar shortage as well, thus potentially leading to an inability to manufacture notebooks In response, PC OEMs are therefore prompted to expand their DRAM procurement in 1H21 On the NAND Flash front, the persistent shortage of NAND Flash controller ICs means that PC OEMs generally carry about 4-5 weeks’ worth of NAND Flash inventory on average, which is relatively lower than their DRAM inventory TrendForce forecasts that Chinese smartphone brands will slow down their procurement of mobile DRAM and NAND Flash solutions during 2H21 However, contract prices of memory products on the whole will unlikely experience a general decline in the second half of the year because demand remains fairly robust in other application segments On the PC and NB front, changes in the fulfillment rates of components that are in shortage will become the key determinant of how PC OEMs evaluate their inventory of well-stocked components It should be pointed out that, as PC OEMs have been maintaining a relatively high inventory of DRAM, the increase in PC DRAM prices in 2H21 will be markedly muted as a result 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
DRAM Revenue for 1Q21 Undergoes 8.7% Increase QoQ Thanks to Increased Shipment as Well as Higher Prices, Says TrendForce

2021/05/11

Semiconductors

Demand for DRAM exceeded expectations in 1Q21 as the proliferation of WFH and distance education resulted in high demand for notebook computers against market headwinds, according to TrendForce’s latest investigations Also contributing to the increased DRAM demand was Chinese smartphone brands’ ramp-up of component procurement while these companies, including OPPO, Vivo, and Xiaomi, attempted to seize additional market shares after Huawei’s inclusion on the Entity List Finally, DRAM demand from server manufacturers also saw a gradual recovery Taken together, these factors led to higher-than-expected shipments from various DRAM suppliers in 1Q21 despite the frequent shortage of such key components as IC and passive components On the other hand, DRAM prices also entered an upward trajectory in 1Q21 in accordance with TrendForce’s previous forecasts In light of the increases in both shipments and quotes, all DRAM suppliers posted revenue growths in 1Q21, and overall DRAM revenue for the quarter reached US$192 billion, an 87% growth QoQ Demand for PC, mobile, graphics, and special DRAM remains healthy in 2Q21 Furthermore, after two to three quarters of inventory reduction during which their DRAM demand was relatively sluggish, some server manufacturers have now kicked off a new round of procurement as they expect a persistent increase in DRAM prices TrendForce therefore forecasts a significant QoQ increase in DRAM ASP in 2Q21 In conjunction with increased bit shipment, this price hike will likely drive total DRAM revenue for 2Q21 to increase by more than 20% QoQ Rebounding DRAM prices were the primary revenue driver for major suppliers in 1Q21 With regards to revenue, the three largest DRAM suppliers saw increases in both ASP and bit shipment Their better-than-expected shipment performances can mostly be attributed to the fact that an increase in DRAM quotes prompted buyers to ramp up their procurement efforts ahead of time In particular, Samsung, SK Hynix, and Micron saw QoQ increases of 85%, 69%, and 96%, respectively, in their revenues in 1Q21, although their market shares remained largely unchanged, with only Micron registering a slight gain, at a 231% market share Going forward, the three suppliers’ market shares will unlikely undergo drastic changes in 2Q21 With regards to profitability, despite the 0-5% increase in DRAM ASP in 1Q21, suppliers registered varying quarterly performances because they each had varying schedules of migrating to advanced process technologies For instance, Samsung’s 1Znm process had a relatively low yield rate in 1Q21 as the company had only initially kicked off mass production with the 1Znm process As such, the company’s operating profit margin dropped from 36% in 4Q20 to 34% in 1Q21 On the other hand, SK Hynix benefitted from improvements in the yield rate of its new process technologies and saw a corresponding improvement in its operating profit margin from 26% in 4Q20 to 29% in 1Q21 Finally, Micron’s quotes for the Dec 2020 to Feb 2021 fiscal period increased by a similar margin compared to its Korean competitors, and its operating profit margin for this fiscal period likewise rose to 26%, from 21% in the prior quarter On the whole, TrendForce expects these suppliers to experience considerable improvements in their profitability in 2Q21 due to surging quotes In particular, as the yield rate of Samsung’s 1Znm process approaches mature levels, Samsung will likely register the highest growth in operating profit margin among the three suppliers DRAM suppliers will accelerate their capacity expansion plans in 2H21 in light of bullish DRAM demand The three largest DRAM suppliers have been responding to the rising demand for DRAM from various end-product segments by accelerating their capacity expansions and advanced process migrations However, the newly added production capacities will not have a noticeable effect on the supply and demand of the DRAM market this year because most of these capacities will be installed in 1H22 With regards to the three aforementioned suppliers, Samsung is not only slowing down the transition of its Line 13 from DRAM manufacturing to CIS (CMOS image sensor) manufacturing, but also aiming to expand the production capacity of its Pyeongtaek-based P2L fab by the end of the year, in response to the bullish uptrend in specialty DRAM demand SK Hynix is both slowing down the transition of its M10 fab from DRAM manufacturing to logic IC manufacturing and reallocating some of its 2022 capital expenditure to 2021 Although there will likely be a slight increase in the wafer input for DRAM at SK Hynix’s new M16 fab at the end of 2021, the growth in SK Hynix’s supply bits this year will be mostly derived from the increased share of DRAM manufactured with the 1Ynm and 1Znm processes Last but not least, Micron is continuing to focus on 1Znm and 1αnm mass production, in addition to raising the share of DRAM manufactured with these processes in its total DRAM bit output this year Owing to its cost advantage, the 1Znm process has become the primary focus of Micron’s process developments This process is also being widely used for various DRAM products manufactured by the company Furthermore, Micron is making a fast push for next-gen process migration by submitting its next-gen 1αnm DRAM products for verification Regardless, the company’s DRAM wafer input this year is expected to remain unchanged from last year, since Micron will not expand its total production capacity by constructing additional fabs in 2021 Taiwanese suppliers are dynamically adjusting their production capacities ahead of price hikes in the bullish specialty DRAM market Compared with the three major suppliers, Taiwanese suppliers have been posting even better performances, primarily because specialty DRAM underwent the first and most significant price hike among all DRAM product categories More specifically, Nanya Tech benefitted the most from the surge in specialty DRAM quotes and experienced a QoQ growth of 217% in its revenue for 1Q21, with a corresponding surge in its operating profit margins from 88% in 4Q20 to 171% in 1Q21 Winbond had a relatively healthy level of client orders throughout 1Q21, during which its specialty DRAM and NAND Flash businesses demonstrated the most remarkable performances Given that the specialty DRAM segment was the first to recover among all DRAM categories, Winbond’s DRAM revenue increased by 9% QoQ in 1Q21 Even so, TrendForce believes that Winbond will not make noticeable contributions towards alleviating the current shortage of specialty DRAM until its Luzhu-based fab in Kaohsiung kicks off mass production in 2022 PSMC’s revenue for 1Q21, which includes only revenue from its in-house PC DRAM products and excludes revenue from its DRAM foundry services, underwent an approximately 7% growth QoQ, though this figure is about 16% if the latter were also included In response to the current DRAM shortage, the three Taiwanese suppliers have been quick to maximize their production efficiencies by migrating some of their production capacities to products in which they have a competitive advantage For instance, Nanya Tech has migrated some of their 20nm production capacity from DDR4 DRAM to DDR3 DRAM since the latter is currently more profitable than the former Conversely, Winbond is allocating its limited DRAM production capacities primarily to low-density products (which are among the most niche products) since doing so gives Winbond substantial power to dictate prices in this product segment PSMC is profiting from the high demand for logic IC and specialty DRAM by prioritizing its capacity allocation between the two products based on their respective quote levels 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

Press Releases
DRAM Prices Projected to Rise by 18-23% QoQ in 2Q21 Owing to Peak Season Demand, Says TrendForce

2021/04/20

Semiconductors

TrendForce’s investigations find that DRAM suppliers and major PC OEMs are currently participating in the critical period of negotiating with each other over contract prices for 2Q21 Although these negotiations have yet to be finalized, the ASP of mainstream DDR4 1G*8 2666Mbps modules has already increased by nearly 25% QoQ as of now, according to data on ongoing transactions This represents a higher price hike than TrendForce's prior forecast of “nearly 20%” On the other hand, prices are likewise rising across various DRAM product categories in 2Q21, including DDR3/4 specialty DRAM, mobile DRAM, graphics DRAM, and in particular server DRAM, which is highly related to PC DRAM and is therefore also undergoing a higher price hike than previously expected TrendForce is therefore revising up its forecast of overall DRAM price hike for 2Q21 from 13-18% QoQ to 18-23% QoQ instead However, the actual increase in prices of various DRAM product categories will depend on the production capacities allocated to the respective products by DRAM suppliers PC DRAM prices are now expected to undergo a 23-28% QoQ growth in 2Q21 due to the increased production of notebook computers PC DRAM contract prices are rising by a higher margin than previously expected for 2Q21 primarily because major PC OEMs are now aggressively expanding their production targets Furthermore, as second quarters are generally peak seasons for notebook production, PC ODMs are now estimated to increase their quarterly production of notebook computers by about 79% QoQ in 2Q21 Finally, with regards to the COVID-19 pandemic, vaccination rates remain relatively low across the globe, meaning WFH and distance education are likely to persist and create continued demand for notebook computers, thereby further expanding the hike in PC DRAM prices DRAM Suppliers will enjoy increased bargaining power in price negotiations as server DRAM prices are expected to increase by 20-25% QoQ in 2Q21 Apart from the issue of short DRAM supply, server DRAM procurement in 2Q21 has benefitted from the positive turn in the view of enterprises toward IT investments as well as the stronger-than-expected demand related to cloud migration There was already a supply gap in 1Q21, and these developments will further drive up demand in 2Q21 Hence, difficulty has increased for buyers and suppliers in reaching an agreement on price Suppliers are in a more advantageous position in contract negotiations since the DRAM market is an oligopoly Therefore, compared to the previous forecast of nearly 20%, TrendForce is now expecting server DRAM contract prices to increase by 20-25% QoQ in 2Q21 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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