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2023/03/02
According to TrendForce’s research, global DRAM revenue fell by 325% QoQ to US$12, 281 million for 4Q22 The QoQ decline for 4Q22 is larger than the QoQ decline of 288% for 3Q22 and comes close to the QoQ decline of 36% for the final quarter of 2008, when the global economy was in the midst of a major financial crisis The main cause of the steep revenue drop in 4Q22 was the plummeting overall ASP DRAM suppliers experienced a rapid accumulation of inventory in 3Q22 due to a freeze in buyers’ demand Subsequently, suppliers were much more energetic in price negotiations for 4Q22 contracts as they were struggling for market share Among the major categories of DRAM products, server DRAM suffered the sharpest price drop in 4Q22 Contract prices of DDR4 and DDR5 server DRAM products registered QoQ drops of 23~28% and 30~35% respectively
The top three DRAM suppliers Samsung, SK hynix, and Micron all posted a significant QoQ drop in revenue for 4Q22 Samsung was the most aggressive in the price competition during the quarter, so it was able to raise shipments despite the general demand slump Samsung’s DRAM revenue came to US$5,540 million with a QoQ decline of 251% Even with this result, Samsung had the smallest revenue drop among the top three SK hynix posted a QoQ drop of 352% in DRAM revenue to reach around US$3,398 million On the whole, the two South Korean suppliers ramped up shipments because 4Q22 was the final quarter of the 2022 fiscal year for them However, the large price concessions that allowed for more shipments also caused their respective ASPs to plunge This, in turn, was reflected in their revenue declines
Turning to Micron, its DRAM revenue fell by 412% QoQ to reach around US$2,829 million Micron’s fiscal quarters do not align with calendar quarters and end earlier compared with other suppliers’ fiscal quarters Therefore, Micron recorded a larger drop in shipments and thereby suffered the largest revenue decline among suppliers Regarding profitability, DRAM suppliers on the whole experienced a massive contraction in operating margin in 4Q22, so they are expected to turn from profit to loss for 1Q23
Regarding the top three suppliers’ plans for developing production capacity in 2023, Samsung is going to optimize the legacy production lines of Line 15, so this fab will experience a marginal drop in DRAM wafer input The newly built P3L, which is the focus of Samsung’s capacity expansion efforts, has begun pilot production in 1Q23 and will be mainly responsible for driving the growth of the supplier’s total DRAM wafer input for this year SK hynix announced in 4Q22 that it will be cutting production, so its DRAM capacity utilization rate is projected to slid from 92% in 1Q23 to 82% in 2Q23 Among SK hynix’s fab sites, the base in the Chinese city of Wuxi will be making the largest production cut Conversely, SK hynix maintains its plan to slightly raise production at M16 in South Korea because this fab deploys its advanced DRAM manufacturing process As for Micron, it is scaling back production at OMT (its operation in Taiwan) and the Hiroshima base simultaneously Micron’s DRAM capacity utilization rate has fallen to 84% and is expected to stay at this level through 2023 On the technology front, Micron has begun mass production with its latest 1beta nm process OMT will also deploy the 1beta nm process within 2023, with wafer input scheduled for the middle of the year and mass production taking place during the second half of the year
With regard to Taiwan-based DRAM suppliers, Nanya posted a QoQ drop of 30% in revenue for 4Q22 Even though Nanya experienced a marginal drop in shipments, its revenue was significantly impacted by the plummeting contract prices Nanya is currently staying with the 20nm process as its main DRAM manufacturing technology, and the output contribution from its 1A nm process has been relatively small Also, Nanya began cutting production in 4Q22 as its operating margin had already arrived at -19% Its DRAM capacity utilization rate has dipped to around 70% PSMC posted a QoQ drop of around 395% in DRAM revenue for 4Q22 It should be noted that PSMC’s DRAM revenue only encompasses the sales of its own branded and in-house manufactured DRAM products The calculation excludes DRAM foundry PSMC’s customers in the consumer DRAM segment are still focusing in inventory reduction, so the demand from them has yet to pick up If DRAM foundry is included in the calculation, PMSC’s QoQ decline came to 274% Lastly, turning to Winbond, the share of known good dies (KGDs) in its DRAM shipments has been fairly large Therefore, its shipments kept sliding during 2H22 as its clients were adjusting their inventories For 4Q22, Winbond’s DRAM revenue fell by 303% QoQ Looking at Winbond’s fab sites, Fab6 in Taichung currently maintains a capacity utilization rate of around 50%, while fab KH in Kaohsiung has entered the pilot production phase In the aspect of manufacturing technology, KH now deploys the 25S nm process, but the supplier also plans to have its 20nm process ready for wafer input in the middle of this year
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/
2023/01/09
TrendForce’s latest analysis of the DRAM market finds that the inventory pressure on suppliers remain significant due to the persistently weak demand for consumer electronics Among the top three DRAM suppliers, only Samsung has seen a slight drop in inventory level thanks to its highly competitive pricing strategy To prevent DRAM prices as a whole from making another sharp dive, a few suppliers such as Micron have been cutting production Therefore, the QoQ decline in DRAM prices are projected to shrink to around 13~18% for 1Q23 However, the slump will have yet to reach the bottom at that time Regarding the QoQ changes in the prices of the major categories of DRAM products for 1Q23, PC DRAM and server DRAM are projected to again register a drop that is near 20% Conversely, mobile DRAM will experience the smallest price decline because its profit margin is ready the thinnest
In the PC DRAM segment, PC OEMs have lowered procurement quantity for two consecutive quarters as sales of notebook (laptop) computers have been lackluster Now, moving into 1Q23, PC OEMs hold around 9~13 weeks of PC DRAM inventory Even though they are working hard to consume the existing stock, the traditional low season acts a powerful constraint The overall PC DRAM bit output is expected to fall during 1Q23 because Micron has already made a marginal cut to its PC DRAM production, and SK Hynix will soon follow suit However, supply glut will still be significant in the PC DRAM segment The top three suppliers have been aggressive in lowering prices for DDR5 products, so the DDR5 penetration rate in the PC DRAM segment is projected to reach almost 20% in 1Q23 Regarding QoQ changes in PC DRAM prices for 1Q23, DDR5 products will experience a drop of around 18~23%, and DDR4 products will experience a drop of around 15~20% The ASP of PC DRAM products is projected to fall by around 15~20% QoQ for 1Q23
Turning to the server DRAM segment, server demand is going to fall during 1Q23 because of the effects of the traditional low season, inventory adjustments, and the recent weakening of the global economy North American cloud service providers have already started to dial down server demand in terms of procurement quantity and the pace of server deployment However, suppliers continue to raise the share of server DRAM in production, so this segment continues to face mounting inventory pressure While some suppliers are cutting production, this is not enough to effectively limit the decline in server DRAM prices Regarding QoQ changes in server DRAM prices for 1Q23, DDR5 products are expected to suffer a decline of 18~23%, which is slightly larger compared with the projected drop experienced by DDR4 products for the same period However, the DDR5 penetration rate in the server DRAM segment is projected to reach just around 10% in 1Q23 Thus, DDR4 products are going to determine the extent of the general decline Currently, the ASP of server DRAM products is projected to fall by around 15~20% QoQ for 1Q23
The mobile DRAM segment has benefited from about six quarters of inventory adjustments on the part of smartphone brands Currently, smartphone brands hold 5~7 weeks of mobile DRAM inventory on average, so the inventory situation is fairly optimal On the other hand, smartphone sales have been in a slump A rebound is not expected in the short term, especially after the latest change in China’s policy on controlling COVID-19 outbreaks With smartphone brands lowering their device sales targets for 2023, there will be a certain degree of difficulty when it comes to inventory consumption in the mobile DRAM segment However, mobile DRAM quotes are starting to show a more moderate decline than before because suppliers have scaled back production, and the effect of this will become more prominent over time Moreover, mobile DRAM already has the lowest profit margin compared with other categories of DRAM products Since the market consensus is that the demand for mobile DRAM products will remain weak, slashing prices further will do little in helping suppliers to capture more market share Hence, TrendForce projects that the QoQ decline in mobile DRAM prices will narrow to around 10~15% for 1Q23
With regard to the graphics DRAM segment, shipments are going to ramp up for graphics cards and notebook computers featuring the latest GPUs However, the overall demand for consumer electronics is sluggish, and the previous period for inventory adjustments was quite long Therefore, graphics DRAM buyers maintains a cautious procurement strategy Furthermore, demand growth still lagged behind supply growth in graphics DRAM segment during 4Q22, so inventory continues to pile up for this product category on the supply side Additionally, for the specifications of the mainstream graphics DRAM solutions, there will be a full-scale shift in buyers’ demand from GDDR6 8Gb to GDDR6 16Gb during 2023 With the demand for them becoming more limited, graphics DRAM products based on GDDR6 8Gb will experience more dramatic price fluctuations TrendForce currently projects that the ASP of graphics DRAM products will fall by about 18~23% QoQ for 1Q23, but the decline could get larger if suppliers continue to undercut each other in this segment
Lastly, in the consumer DRAM segment, prices have yet to leave the downturn phase as there are no signs of buyers ramping up procurement activities Also, the flow of consumer DRAM orders related to networking devices was steady before but has now started to gradually decelerate this first quarter Due to these developments, shipments of consumer DRAM products on the whole are going to slide Even though Micron began to cut production in November last year, suppliers’ DRAM inventories have been climbing to new heights This segment will continue to experience excess supply unless suppliers undergo several quarters of inventory adjustments and make larger production cuts TrendForce projects that the ASP of consumer DRAM products will fall by 18~23% QoQ for 1Q23 as supply glut persists in this segment
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/
2022/11/16
Global market intelligence firm TrendForce reports that for 3Q22, the revenue of the whole DRAM industry dropped by 289% QoQ to US$1819 billion This decline is the second largest to the one that the industry experienced in 2008, when the global economy was rocked by a major financial crisis Regarding the state of the DRAM market in 3Q22, the QoQ decline in contract prices widened to the range of 10~15% as the demand for consumer electronics continued to shrink Server DRAM shipments, which had been on a relatively stable trend compared with shipments of other types of DRAM products, also slowed down noticeably from the previous quarter as buyers began adjusting their inventory levels
Turning to individual DRAM suppliers’ performances in 3Q22, the top three suppliers (ie, Samsung, SK hynix, and Micron) all exhibited a QoQ drop in revenue Samsung posted US$740 billion and a QoQ drop of 335%, which was the largest among the top three SK hynix’s revenue fell by 252% QoQ to around US$524 billion As for Micron, its revenue came to around US$481 billion Since Micron marks its fiscal quarters differently, its DRAM ASP showed a QoQ decline that was smaller than the ones suffered by the two Korean suppliers And as a result of this, Micron’s QoQ revenue decline was also the smallest among the top three TrendForce points out that the top three are still maintaining a relatively high operating margin at this moment Nevertheless, the inventory correction period that has started this year will last through the first half of next year, so they will experience a continuing squeeze on profit
On the topic of suppliers’ capacity expansion plans, Samsung has gradually slowed down the transfer of its legacy wafer processing capacity from DRAM to CMOS image sensors due to the recent fall in demand for camera modules Next year, Samsung will raise its DRAM production capacity as its new fab P3L enters operation However, seeing that inventory reduction is not progressing at the originally anticipated pace, Samsung will decelerate its technology migration to limit its output growth Looking at SK hynix, it will also rein in its output growth next year by putting some brake on its technology migration Moving to Micron, it has pushed back the schedule for mass production with its 1beta nm process This deferment has to do with the higher difficulty level for the development of this technology and the general demand slump Micron’s output growth in 2023 is forecasted to be the smallest among the top three Furthermore, TrendForce is not ruling out the possibility of Micron making more tangible production cuts in response to the rapidly shrinking profit margin
With regard to Taiwan-based DRAM suppliers, Nanya suffered the largest QoQ revenue drop among the top six suppliers in 3Q22, reaching as much as 408% Nanya’s result was attributed to the sizable share of consumer DRAM in its product mix as well as the sizable share of customers from Mainland China in its client base Moving into this fourth quarter, Nanya has already scaled back wafer input but maintains the pace of its migration to the 1A nm However, this technology will still be at the customer sample stage in 2023 as Nanya’s clients hold a cautious demand outlook and are thus not keen on adopting the more advanced process Therefore, the 1A nm process is not expected to make a noticeable contribution to Nanya’s output until 2024 Turning to PSMC, its revenue fell by around 400% QoQ for 3Q22 owing to the plummeting consumer DRAM prices PSMC’s DRAM revenue that is presented here mainly pertains to the sales of its branded DRAM products that are manufactured in-house and excludes its DRAM foundry service However, if DRAM foundry service is included in the calculation, then the QoQ decline was 229% Lastly, looking at Winbond, its 3Q22 revenue still showed a significant QoQ decline of 374% even with a fairly conservative pricing strategy This has to do with the considerable contraction of its shipments Winbond already lowered the capacity utilization rate of its fab in Taichung in 3Q22 As for the setup of its new fab in Kaohsiung, the schedule for entering the mass production phase has been pushed back slightly due to the unfavorable market situation The Kaohsiung fab will initially manufacture DRAM using the 25S nm process This is expected to be followed by the deployment of the supplier’s 20nm process in 2H23
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/
2022/10/12
Current US sanctions on China have extended their reach to strike at HPC and sectors such as aerospace, automotive market, and military industry TrendForce indicates, the market for high-end computing chips (including CPU, GPU, etc) has borne the brunt of these restrictions at this stage, while those providing related storage such as DRAM and NAND Flash also face potential supply disruption At present, this not only includes domestic companies in mainland China but also extends to related US-based suppliers Among them, server companies that rely on high-intensity computing will face greater scrutiny
Impact analysis on server terminal shipments
In terms of server terminal shipments, since relevant component suppliers have not yet been able to confirm whether services provided by the four major cloud service providers (CSPs) in China, Baidu, ByteDance, Alibaba, and Tencent, involve military use, before CSPs sign MOUs (memoranda of understanding), component manufacturers may temporarily delay shipments to the Chinese market However, TrendForce believes, due to the fact that current CSP buyers’ component inventories remain sufficient, the short-term impact on global server market shipment performance is relatively low and long-term impact depends on the evolution of the US Department of Commerce's rules
Huawei and Sugon, two companies that have received attention at this stage due to the US ban, have previously withdrawn from the x86 server market and turned into cloud business providers and whole server delivery has been transferred to other domestic OEMs and outsourced computing power leasing, so as not to be affected by sanctions However, due to the previous CPU ban, Sugon has turned to AMD to obtain authorization for localized chips, which may be significantly curtailed by this ban In 2022, Sugon's market share in the overall server market will be approximately 23% and 85% of the Chinese market
TrendForce believes, it cannot be ruled out that relevant Chinese OEMs may have server products that may be rendered to government supercomputing centers in the future Inspur, H3C, and Lenovo will face more exacting future scrutiny and, if consequences intensify, the mainland Chinese industrial chain may feel direct effects Although commercial servers are not currently on the list of directly restricted items, if friction between the United States and China intensifies in the future, it cannot be ruled out that the US Department of Commerce will add more potentially risky Chinese server OEMs and CSPs onto the UVL list If certification cannot be realized within 60 days of being included in the UVL list, these entities will be included on the entity list The worst case scenario will be a future trend of negative growth in Chinese server demand
Since the restrictions enumerated in this ban are primarily concentrated in the HPC field, the greatest factor affecting Sugon is the company largely providing server OEM to government departments including in supercomputers, military aerospace, and government server farms At present, there are 8 national-level supercomputing centers in mainland China and the supercomputer located in the center of Wuxi is the headquarters of China's self-developed chips including the self-developed Sunway TaihuLight As the US Department of Commerce continues to strengthen its sanctions, China's supercomputing technology and domestic research capabilities will be severely damaged in the future
Impact analysis on GPU and CPU sectors
At present, companies utilizing high-end graphics cards are primarily concentrated in the HPC sector In terms of CSPs, Alibaba and Baidu are the largest companies in mainland China These two CSP companies account for up to 60% of the market share of GPU usage in China Before the previous ban at the end of August, Chinese CSP operators had to submit purchase applications before procurement but they could not apply at all after the ban However, based on the premise that buyer inventory levels on hand remain high and the supply of goods through distribution channels is sufficient, no effect on demand is forecast until 1H23 Nonetheless, it will be a challenge in the long-term Since the ban expressly prohibits supercomputing center applications such as HPC, TrendForce assesses that GPU servers used by supercomputing centers will be directly affected, which accounts for up to 30% of China's GPU market
In terms of chip computing performance control, ECCNs 3A090 and 4A090 are newly added sanctioned items and chips with a total processing performance of more than 4,800 (inclusive) calculated by TOPS will be restricted GPUs are usually used to directly assist in performing complex operations Basically, NVIDIA's A100 PCIe Gen4 and AMD's MI250 OAM Module exceed the 4,800 limit With new high computing performance products restricted in the future, development of server acceleration computing in China will take a hit
However, the computing performance of most server CPU products is generally lower than the provisions of the ban Only Chinese-made chips such as Tianjin Haiguang face direct restrictions and other CPUs such as Intel and AMD servers will not be subject to prohibition At this stage, Intel and AMD will sign MOUs with relevant mainland Chinese manufacturers to ensure that related products cannot be used in military and supercomputing fields before shipment In today's server CPUs, the computing performance of the commonly used Intel Ice Lake CPU series does not reach the limit imposed by US sanctions
Impact analysis on the memory sector
At present, Samsung and SK hynix have also suspended their supply of product to Sugon If Sugon can clarify procured memory is not used for supercomputing, domestic server products, etc, the parties will be able to reach a consensus for shipment In the long run, Korean companies are evaluating whether they need a written commitment from each customer to disavow using purchasing memory products in supercomputers Therefore, some memory shipments may be affected before documents are signed The industry generally believes that market inventory remains relatively abundant and there will be no substantial damage to the market in the short term As far as SSD is concerned, the greatest utilization remains in the category of AI/DL (Deep Learning), since most of the data trained from DL must be stored in faster and more convenient SSDs for use in inference scenarios If the suspension of shipments caused by the current ban cannot be rectified by relevant buyer agreements, the development of Chinese server manufacturers in related AI/DL fields may be hamstrung and a calamitous decline in the market penetration rate of enterprise SSDs from international manufacturers cannot be ruled out
Impact analysis on the networking sector
There are three reasons for a relatively minor impact assessment on the well-connected suppliers in the networking sector First, there are numerous networking suppliers and many of them are in China Since the demand for key components is relatively small, Chinese suppliers should be able to keep up Second, the mainstream process in this field is a mature process and future expansion is less restricted Third, from the perspective of supplier shipments, after foundry assembly, packaging, and testing, there are multiple distribution channels for the circulation of the final product and it will be difficult to determine whether terminals are military use However, from the perspective of long-term impact, there is a high probability that Chinese manufacturers will give priority to China's local supply chain in the future to ensure future supply This move will undoubtedly deepen the resistance of other suppliers' shipments to China, so it is necessary to open up multiple shipping channels to stabilize market share
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/
2022/10/03
According to a TrendForce investigations, memory pricing began to decline from 4Q21 due to weakening demand for certain consumer electronics Coupled with the impact of rising inflation, the Russian-Ukrainian war, and pandemic policies, demand in peak season was weak, resulting in inventory pressure that has extended from the buyer side to manufacturers In response to the aforementioned situation, Micron announced last week that it would cut production of DRAM and NAND Flash, becoming the first major memory manufacturer to officially reduce its capacity utilization plan In terms of NAND Flash, the market situation is more severe than that of DRAM As the average contract price of mainstream capacity wafers has fallen to their cash cost and is approaching the periphery of selling at a loss for various manufacturers, Kioxia also announced that it will reduce NAND Flash capacity utilization by 30% from October on the heels of Micron’s announcement
In terms of DRAM, current contract pricing remains higher than the total production cost of various mainstream suppliers Therefore, compared with NAND Flash, it remains to be seen whether there will be a significant reduction in production In addition to mentioning the slight reduction in capacity utilization in this sector currently, Micron mainly emphasized its sharp downward revision of capital expenditures in 2023 and that the annual growth of DRAM production bits next year will only be around 5% TrendForce believes, according to Micron, to actualize such conservative bit growth means that there is still room for a significant downward revision in capacity utilization and the extent to which Micron's subsequent production reductions are implemented remains to be seen
In terms of NAND Flash, Micron originally planned to gradually increase its proportion of 232-layer products from 4Q22 However, with the implementation of the company’s decision to reduce production, Micron's mainstream processes are estimated to remain dominated by 176-layer products in 2023, while wafer starts in legacy processes will also fall Kioxia and WDC originally planned to migrate to 162-layer products starting in 4Q22 but WDC slowed CapEx in 2023 When funding is hard to come by and demand visibility poor, the proportion of 162-layer products will fall greatly and the company’s original plan to replace mainstream 112-layer products in 2023 will not be achieved
More manufactures limiting bit output cannot be ruled out as only large-scale production reduction can reverse supply/demand imbalance in 2023
After analyzing 2023 supply and demand in the memory market, due to a conservative demand outlook, DRAM and NAND Flash look to be greatly oversupplied in each quarter and inventory pressure will continue to accelerate in 1H23 In the DRAM sector, after Micron led the way to announce a DRAM production reduction plan that will fall far below historical levels of supply-side bit growth, the 2023 DRAM Sufficiency Ratio will contract from the 116% previously forecast by TrendForce to less than 10%, helping to alleviate rapidly deteriorating inventory pressure However, more suppliers must be relied on to join in the actual reduction of DRAM production in the future in order to reverse the supply and demand imbalance next year
It is imperative to reduce bit supply in the NAND Flash field due to the large number of competitors and the fact that manufacturers have yet to encroach on the physical limits of manufacturing Considering that supply-side bit growth from Micron and Kioxia has been downgraded, the 2023 NAND Flash Sufficiency Ratio will drop significantly from the original estimate of 101% to 56% Under the expectation that more NAND Flash suppliers will join the ranks reducing production due to loss considerations, inventory pressure is expected to ease in the 2Q23, while price declines are expected to diminish in 2H23
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/
