3Q17 DRAM Revenue Hit a New High With a 16.2% Sequential Increase

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Revenue of the entire global DRAM industry climbed to a new historic high for the third quarter of 2017, reports DRAMeXchange, a division of TrendForce. Contract prices of various DRAM products jumped by about 5% on average in the third quarter from the second quarter on the back of the year-end busy season and limited bit supply growth. As the market still experienced tight supply, total DRAM revenue for the third quarter rose by 16.2% from the second quarter.

Avril Wu, research director of DRAMeXchange, noted that latest fourth-quarter DRAM market outlook indicates that the overall sequential price increase will average around 10%. “Most PC-OEMs have concluded negotiating their contract prices with DRAM suppliers for this fourth quarter,” said Wu, “Contracts with first-tier DRAM suppliers show that the prices of PC DRAM modules have now risen above US$30 and maintained around US$30.5 on average, amounting to a 7% hike from the third quarter. This price increase is mainly attributed to the influence of the booming mobile DRAM market, which is in turn fueled by the limited product supply and the releases of flagship smartphones during the traditional busy season of this year’s second half.”

Wu also noted: “A closer look at the mobile DRAM market has revealed the Samsung has noticeably raised the quotes of its products. To ensure sufficient inventory, smartphone makers generally have no choice but to accept the price increases. Depending on the capacity specifications, prices of mobile DRAM products could go up by 10% to 20% in the fourth quarter compared with the third. As for the server DRAM market, strong demand during the fourth quarter also will push up contract prices of memory modules by 6% to 10% from the previous three-month period.”

Revenue of the entire global DRAM industry climbed to a new historic high for the third quarter of 2017, reports DRAMeXchange, a division of TrendForce. Contract prices of various DRAM products jumped by about 5% on average in the third quarter from the second quarter on the back of the year-end busy season and limited bit supply growth. As the market still experienced tight supply, total DRAM revenue for the third quarter rose by 16.2% from the second quarter.

Avril Wu, research director of DRAMeXchange, noted that latest fourth-quarter DRAM market outlook indicates that the overall sequential price increase will average around 10%. “Most PC-OEMs have concluded negotiating their contract prices with DRAM suppliers for this fourth quarter,” said Wu, “Contracts with first-tier DRAM suppliers show that the prices of PC DRAM modules have now risen above US$30 and maintained around US$30.5 on average, amounting to a 7% hike from the third quarter. This price increase is mainly attributed to the influence of the booming mobile DRAM market, which is in turn fueled by the limited product supply and the releases of flagship smartphones during the traditional busy season of this year’s second half.”

Wu also noted: “A closer look at the mobile DRAM market has revealed the Samsung has noticeably raised the quotes of its products. To ensure sufficient inventory, smartphone makers generally have no choice but to accept the price increases. Depending on the capacity specifications, prices of mobile DRAM products could go up by 10% to 20% in the fourth quarter compared with the third. As for the server DRAM market, strong demand during the fourth quarter also will push up contract prices of memory modules by 6% to 10% from the previous three-month period.”

SK Hynix and Micron to focus on improving yields and technology migration as Samsung contemplates capacity expansion

With regard to technology and capacity planning, Samsung’s goal for 2017 has been the transition to the 18nm production. However, surging profits of the competitors over the recent quarters is starting to lean on Samsung, creating the possibility that the market leader may need to expand capacity to maintain its dominance. By increasing its output, Samsung will moderate the undersupply situation and constrain the price increases of its competitors. In sum, expanding capacity and maintaining a one- to two-year technological lead over its rivals will reinforce Samsung’s leadership in the long run.

SK Hynix has been focusing on improving the yield rate and expanding the deployment of its 21nm process. Its products based on the 18nm process on the other hand will roll out in small volumes at the end of this year. In terms of capacity planning, SK Hynix is currently building a second 12-inch wafer fab in Wuxi, China. The facility is expected to be in operation in 2019 at the earliest. As for Micron, its subsidiary – Micron Memory Taiwan (formerly Rexchip) – has been improving its 17nm process, which is expected to have a yield rate of least 80% by the end of this year. Micron’s other subsidiary – Micron Technology Taiwan (formerly Inotera) – is still producing mainly on the 20nm process. However, Micron Technology Taiwan is planning to migrate half of its production capacity to the 17nm process in 2018.

According to DRAMeXchange’s third-quarter analysis on the revenue results of Taiwan’s domestic DRAM suppliers, Nanya posted a marginal growth of 5.3% from the second quarter. Specialty DRAM products make up the majority of Nanya’s product mix, and the price increases for these products have not been as large as the increases for products from the major suppliers (that also have more complete product lines). In the future, Nanya’s room for profit growth will expand as its cost structure improves due to the increasing yield of its 20nm technology.

As for other Taiwanese DRAM suppliers, Powerchip actually saw its revenue fell by 3.6% from the previous quarter. Powerchip during the third quarter was willing to give up a part of its DRAM revenue as the company has decided that more profit can be made by doing foundry works for other memory companies such as ESMT and AP Memory. As a result, a part of Powerchip’s capacity that was originally for DRAM was then reassigned to make other products. Winbond’s third-quarter revenue rose 8.7% from the second quarter. Winbond has yet to offer a clear technology development plan. Therefore, the ASP trend will probably be the main factor influencing the company’s DRAM revenue in the future.