DRAM


2021-12-13

DRAM ASP Expected to Decline by 8-13% QoQ in 1Q22 Owing to Seasonal Demand Downturn, Says TrendForce

Regarding the shipment of various end products in 4Q21, the quarterly shipment of notebook computers is expected to remain about the same as 3Q21 figures, as prior component gaps were partially resolved during the quarter, according to TrendForce’s latest investigations. As such, since PC OEMs’ DRAM inventory has lowered by several weeks, TrendForce has also further reduced its forecast of DRAM price drops for 1Q22. Even so, the overall demand for DRAM will still enter a cyclical downturn in 1Q22, during which DRAM ASP will also maintain a downward trajectory with an 8-13% QoQ decline. Whether this price drop will subside going forward will depend on how well suppliers manage their inventory pressure and how DRAM purchasers anticipate further price changes.

Decline in PC DRAM prices will narrow somewhat as PC OEMs reduce inventory

Whereas demand for Chromebooks has noticeably slowed down, demand for consumer and commercial notebooks remains strong. Furthermore, certain components which were previously in shortage are starting to experience improved lead times. Hence, quarterly shipment of notebook computers for 4Q21 will likely surpass earlier projections. Looking ahead to 1Q22, not only will the demand side undergo a cyclical downturn, but the sufficiency ratio of PC DRAM will also surpass 3.0% following 4Q21’s high base period for comparison. These factors will result in DRAM prices undergoing a noticeable decline, although PC OEMs will carry a lower inventory of DRAM in 1Q22 compared with 11-13 weeks of inventory in the previous quarter, thereby helping to curb the price drop of PC DRAM products. On the other hand, as mobile DRAM prices begin to drop, certain DRAM suppliers have begun reallocating some of their production capacities from mobile DRAM to PC DRAM. As a result, PC DRAM bit supply will likely undergo a corresponding increase in the short run. In sum, although the above factors are able to provide some upside momentum that narrows the price drop of PC DRAM products, they are not enough to result in an upturn. In particular, DDR4 and DDR5 PC DRAM will experience QoQ declines of 5-10% and 3-8%, respectively, for 1Q22, although the latter product will not noticeably impact the overall PC DRAM ASP, as its penetration rate is still relatively low.

Server DRAM prices will decrease by about 8-13% QoQ due to slowdown in procurement activities

At the moment, CSPs and enterprise clients are carrying about 6-9 weeks and 8-10 weeks of server DRAM inventory, respectively. Although these levels represent a slight decline compared to the end of 3Q21, this decline will not substantially contribute to an increase in demand. Hence, server DRAM buyers will remain relatively conservative with regards to procurement activities before server DRAM prices reach a level that these buyers consider to be rock bottom. DRAM suppliers’ inventory of server DRAM, on the other hand, has been gradually rising in 1H21 owing to decreased demand. Furthermore, certain suppliers have ramped up their wafer input for server DRAM products, leading to an increased production. In addition, while both buyers and sellers have reached a consensus on the falling prices of server DRAM, supply chain-related component gap issues have become gradually resolved, meaning Tier 1 clients will lessen their server DRAM procurement in the upcoming off-season. As a result, suppliers will then be able to fulfill orders that were placed by Tier 2 clients but previously deferred because suppliers prioritized orders from Tier 1 clients. These Tier 2 client orders will provide some upside demand for server DRAM, which is a component that is in relative surplus compared to other components. TrendForce therefore expects server DRAM prices to decrease by 8-13% QoQ in 1Q22, during which server DRAM prices will experience the most severe declines compared to the other quarters in 2022.

Mobile DRAM prices will decline by about 8-13% QoQ in light of intensifying oversupply

Thanks to mobile DRAM suppliers’ aggressive sell-offs in 4Q21, smartphone brands still carry a high level of mobile DRAM inventory as of the end of 2021. Looking ahead to 1Q22, not only will the market welcome the arrival of the traditional off-season, but other issues with the supply of processor chip bundles and the impact of the COVID-19 pandemic will also result in a 10% QoQ drop in smartphone production for the quarter. Smartphone brands will become even more careful with respect to their procurement activities so as to avoid continually accumulating inventory. As smartphone brands revise down their production targets, market demand for mobile DRAM has therefore become weaker now than it was in 1H21, in turn exacerbating the oversupply situation, which is reflected in the persistently rising mobile DRAM inventory of DRAM suppliers. On the whole, the aforementioned issues of high inventory levels and oversupply situation will lead smartphone brands to further conservatize their production and procurement plans in 1Q22. Given that suppliers have suggested a sales strategy of negotiating for 4Q21 and 1Q22 prices collectively, and both buying and selling sides are confronted with inventory pressure, TrendForce thus forecasts an 8-13% QoQ decline in mobile DRAM prices for 1Q22.

Graphics DRAM prices will hold flat while demand improves and spot prices rises ahead of time

The application demand for graphics DRAM has been recovering noticeably in the recent period. Even so, it is worth pointing out that the graphics DRAM market is subject to a very high degree of fluctuations, and this situation is exacerbated by the introduction of the application demand from cryptocurrency mining in recent years. Because the values of cryptocurrencies can swing dramatically, GPU manufacturers such as NVIDIA and AMD have to constantly adjust their sales strategies and switch between bundling and de-bundling. In so doing, they are contributing to the rapid rise and fall of graphics DRAM demand. The graphics DRAM products that the three dominant suppliers are now producing belong to the GDDR6 series. The latest distribution of graphics DRAM output by chip type shows that suppliers are also gradually shifting their focus from 8Gb to 16Gb. Micron, in particular, is the most proactive in this transition. On the other hand, the mainstream graphics cards are still using 8Gb chips at this moment, so the demand for 8Gb graphics DRAM chips has actually increased. In addition, spot prices of both GDDR5 8Gb and GDDR6 8Gb chips have experienced huge price hikes. Due to this uptrend in spot prices, the difference between spot and contract prices is now negligible for graphics DRAM. Some spot transactions even reveal prices that are higher than contract prices. This latest development reflects the situation where buyers are more proactive in price negotiations. Prices of graphics DRAM products on the whole will be fairly constrained from declining further due to the rise in spot prices, the aforementioned demand turnaround, and Micron’s decision to scale back production for 8Gb chips. Taking these factors into account, TrendForce expects that the overall price trend will stay mostly flat.

DDR3 Consumer DRAM prices will drop by about 3-8% QoQ despite reduced supply

The demand for consumer (specialty) DRAM is expected to be relatively weak in 1Q22 due to the effect of the traditional off-season for consumer electronics. Also, demand will stay fairly depressed for TVs, which represent the leading source of in-home entertainment spending. This is because countries around the world will continue in their attempts to lift their pandemic-related restrictions. In addition to these factors, component gaps in the supply chain will still be a serious challenge for device manufacturers. As DRAM components are in excess supply relative to non-memory components, device manufacturers will be less willing to stock up on the former. Suppliers have been slow to scale back production for DDR3 products this year because prices of DDR3 products surged during the first half of the year. However, the downward pressure on prices has now become much more significant, so the two leading South Korean suppliers have taken the initiative to revise their product mix strategies. Hence, they will again transfer more of their mature wafer processing capacity from DDR3 products to CMOS image sensors or logic ICs. Turning to price trend, TrendForce points to the strong correlation between DDR4 consumer DRAM products and PC DRAM products. The latter were the first to experience a weakening of demand, and their prices have already made a downward turn in 4Q21. Looking ahead to 1Q22, contract prices of PC DRAM products will keep falling because of their significant difference with spot prices. This means that DDR4 consumer DRAM products will also suffer sliding prices for 1Q22 with QoQ declines reaching 5-10%. Looking at DDR3 consumer DRAM products, their prices will also drop even as their supply is shrinking. Contract prices of DDR3 2Gb chips are projected fall by 3-8% QoQ on average for 1Q22, whereas DDR3 4Gb chips are projected to register larger declines.

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@trendforce.com

2021-11-16

DRAM Industry’s Revenue Rises by 10% QoQ for 3Q21 Thanks to Slight Shipment Growth and Ongoing Quote Hikes, Says TrendForce

DRAM buyers were aggressively stocking up during 1H21 because quotes began to rise at the start of the year, and there were concerns about shortages in the supply chain, according to TrendForce’s latest investigations. To avoid the risk of a supply crunch, most DRAM buyers kept raising their demand until the middle of the year. Moving into this second half of the year, the COVID-19 pandemic has exacerbated component gaps, the adverse effect of which on OEMs’ ability to assemble their end products has widened as well. Due to having a glut of memory and a shortage of other key components, some OEMs have opted to scale back DRAM procurement. PC OEMs have especially become noticeably restrained in this regard. Fortunately, the server-related segment of the market has been propping up the overall demand; and because of this, most DRAM suppliers were able to post a marginal growth in shipments for 3Q21. Additionally, quotes for DRAM product also kept rising in 3Q21. On account of these factors, the quarterly total DRAM revenue rose again by 10.2% QoQ to US$26.6 billion for 3Q21.

Regarding 4Q21, DRAM buyers that are already carrying a high level of inventory will probably adopt an even more conservative stance, as OEMs are still affected by component gaps in the supply chain while also preparing for stock-taking at the end of the year. Without adequate demand for support, DRAM prices on the whole are going to make a downward turn in 4Q21 and thereby end this short three-quarter period of cyclical price upturn. Also, since 4Q21 is going to be the first quarter in the general downtrend in quotes, buyers anticipate further price reductions in the future and are more reluctant to stock up in the near term. Declines in quotes will continue to widen as a result. With demand shrinking and prices falling, the DRAM industry will inevitably experience a drop in revenue as well.

DRAM suppliers saw higher profits in 3Q21 because of rising prices and growth in output shares of more advanced process technologies

Looking at the performances of individual DRAM suppliers for 3Q21, the three dominant suppliers all had positive revenue growth but diverged slightly in bit shipments. Samsung and Micron posted a small QoQ increase in their respective bit shipments, whereas SK hynix posted a small QoQ drop. The rise in quotes was able to offset the weakening momentum in bit shipments, so the top three suppliers managed to again raise their revenues from the previous quarter. Samsung’s, Sk hynix’s, and Micron’s QoQ revenue growth rates came to 11%, 8%, and 12% respectively. While their growth rates were still around the 10% level, they were more modest compared with the previous quarter. In the ranking by revenue market share, Samsung remained at the top with its market share expanding further to 44%. SK hynix and Micron were still at second and third place respectively. The former’s market share shrank a bit to 27.2% due to the decline in bit shipments, whereas the latter’s market share grew slightly to 22.9%.

In terms of profitability, 3Q21 saw continuing improvements thanks to rising quotes and growth in the output shares of the more advanced process technologies. Samsung raised its operating margin to 53% in 3Q21 as the share of 1Z nm products in its output kept growing. As such, Samsung’s operating margin reached almost to the high of nearly three years ago. Likewise, SK hynix’s operating margin grew to 47% in 3Q21 because of the increase in the output share of 1Z nm products. As for third-largest supplier Micron, the increase in its ASP for its latest fiscal quarter (June to August) is similar to the increases in the two South Korean suppliers’ respective ASPs for 3Q21. Its operating margin also rose to 42% for this period. Moving into 4Q21, TrendForce expects the slide in DRAM prices to be an inescapable trend. Whether individual suppliers will be able to maintain a high level of profitability depends on their own progress in process migration and yield rate improvement.

While the specialty DRAM market weakened in 3Q21, Taiwanese suppliers trailed closely behind the three dominant suppliers

Compared with mainstream DRAM products, specialty DRAM underwent a higher magnitude of price hikes in 1H21. Hence, as demand for TVs and other consumer electronics fell in 3Q21, and supply chain disruptions persisted, clients in turn reduced their DRAM procurement. This reduced demand indirectly impacted the revenue performances of Taiwanese suppliers, which primarily target the consumer electronics market. Nanya Tech continued to raise its quarterly ASP in order to offset weak shipment. The company’s revenue increased by about 6% QoQ in 3Q21, while its operating profit margin also increased from 31.2% in 2Q21 to 38.1% in 3Q21 due to the price hike. Winbond benefitted from high demand for its low-density (1/2Gb) products and recorded a nearly 13% QoQ increase in DRAM revenue in 3Q21. Among all Taiwanese suppliers, Winbond registered the strongest revenue growth during the quarter.

Nevertheless, TrendForce’s investigations also find that the physical spaces within the two aforementioned Taiwanese suppliers’ fabs are now fully occupied, meaning the suppliers are unable to install additional equipment in these fabs before building new fabs. Hence, these suppliers’ financial performances will be heavily impacted by their ASPs in the short run. For instance, Nanya Tech’s new facilities will not contribute to DRAM production until construction finalizes in 2024. In the short run, Nanya Tech is able to slightly increase its DRAM bit shipment only through migrating to the advanced 1A/1B nm process technologies. Similarly, Winbond will be able to continue expanding its production capacity only after its new fab located in Luzhu, Kaohsiung kicks off mass production in 2H22. As for PSMC, its revenue from sales of PC DRAM products manufactured in-house increased by about 6% QoQ in 3Q21. However, PSMC’s total revenue from both sales of in-house DRAM and its DRAM foundry business increased by 12% QoQ in 3Q21.

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@trendforce.com

2021-11-15

HBM/CXL Emerge in Response to Demand for Optimized Hardware Used in AI-driven HPC Applications, Says TrendForce

According to TrendForce’s latest report on the server industry, not only have emerging applications in recent years accelerated the pace of AI and HPC development, but the complexity of models built from machine learning applications and inferences that involve increasingly sophisticated calculations has also undergone a corresponding growth as well, resulting in more data to be processed. While users are confronted with an ever-growing volume of data along with constraints placed by existing hardware, they must make tradeoffs among performance, memory capacity, latency, and cost. HBM (High Bandwidth Memory) and CXL (Compute Express Link) have thus emerged in response to the aforementioned conundrum. In terms of functionality, HBM is a new type of DRAM that addresses more diverse and complex computational needs via its high I/O speeds, whereas CXL is an interconnect standard that allows different processors, or xPUs, to more easily share the same memory resources.

HBM breaks through bandwidth limitations of traditional DRAM solutions through vertical stacking of DRAM dies

Memory suppliers developed HBM in order to be free from the previous bandwidth constraints posed by traditional memory solutions. Regarding memory architecture, HBM consists of a base logic die with DRAM dies vertically stacked on top of the logic die. The 3D-stacked DRAM dies are interconnected with TSV and microbumps, thereby enabling HBM’s high-bandwidth design. The mainstream HBM memory stacks involve four or eight DRAM die layers, which are referred to as “4-hi” or “8-hi”, respectively. Notably, the latest HBM product currently in mass production is HBM2e. This generation of HBM contains four or eight layers of 16Gb DRAM dies, resulting in a memory capacity of 8GB or 16GB per single HBM stack, respectively, with a bandwidth of 410-460GB/s. Samples of the next generation of HBM products, named HBM3, have already been submitted to relevant organizations for validation, and these products will likely enter mass production in 2022.

TrendForce’s investigations indicate that HBM comprises less than 1% of total DRAM bit demand for 2021 primarily because of two reasons. First, the vast majority of consumer applications have yet to adopt HBM due to cost considerations. Second, the server industry allocates less than 1% of its hardware to AI applications; more specifically, servers that are equipped with AI accelerators account for less than 1% of all servers currently in use, not to mention the fact that most AI accelerators still use GDDR5(x) and GDDR6 memories, as opposed to HBM, to support their data processing needs.

Although HBM currently remains in the developmental phase, as applications become increasingly reliant on AI usage (more precise AI needs to be supported by more complex models), computing hardware will then require the integration of HBM to operate these applications effectively. In particular, FPGA and ASIC represent the two hardware categories that are most closely related to AI development, with Intel’s Stratix and Agilex-M as well as Xilinx’s Versal HBM being examples of FPGA with onboard HBM. Regarding ASIC, on the other hand, most CSPs are gradually adopting their own self-designed ASICs, such Google’s TPU, Tencent’s Enflame DTU, and Baidu’s Kunlun – all of which are equipped with HBM – for AI deployments. In addition, Intel will also release a high-end version of its Sapphire Rapids server CPU equipped with HBM by the end of 2022. Taking these developments into account, TrendForce believes that an increasing number of HBM applications will emerge going forward due to HBM’s critical role in overcoming hardware-related bottlenecks in AI development.

A new memory standard born out of demand from high-speed computing, CXL will be more effective in integrating resources of whole system

Evolved from PCIe Gen5, CXL is a memory standard that provides high-speed and low-latency interconnections between the CPU and other accelerators such as the GPU and FPGA. It enables memory virtualization so that different devices can share the same memory pool, thereby raising the performance of a whole computer system while reducing its cost. Hence, CXL can effectively deal with the heavy workloads related to AI and HPC applications.

CXL is just one of several interconnection technologies that feature memory sharing. Other examples that are also in the market include NVLink from NVIDIA and Gen-Z from AMD and Xilinx. Their existence is an indication that the major ICT vendors are increasingly attentive to the integration of various resources within a computer system. TrendForce currently believes that CXL will come out on top in the competition mainly because it is introduced and promoted by Intel, which has an enormous advantage with respect to the market share for CPUs. With Intel’s support in the area of processors, CXL advocates and hardware providers that back the standard will be effective in organizing themselves into a supply chain for the related solutions. The major ICT companies that have in turn joined the CXL Consortium include AMD, ARM, NVIDIA, Google, Microsoft, Facebook (Meta), Alibaba, and Dell. All in all, CXL appears to be the most favored among memory protocols.

The consolidation of memory resources among the CPU and other devices can reduce communication latency and boost the computing performance needed for AI and HPC applications. For this reason, Intel will provide CXL support for its next-generation server CPU Sapphire Rapids. Likewise, memory suppliers have also incorporated CXL support into their respective product roadmaps. Samsung has announced that it will be launching CXL-supported DDR5 DRAM modules that will further expand server memory capacity so as to meet the enormous resource demand of AI computing. There is also a chance that CXL support will be extended to NAND Flash solutions in the future, thus benefiting the development of both types of memory products.

Synergy between HBM and CXL will contribute significantly to AI development; their visibility will increase across different applications starting in 2023

TrendForce believes that the market penetration rate of CXL will rise going forward as this interface standard is built into more and more CPUs. Also, the combination of HBM and CXL will be increasingly visible in the future hardware designs of AI servers. In the case of HBM, it will contribute to a further ramp-up of data processing speed by increasing the memory bandwidth of the CPU or the accelerator. As for CXL, it will enable high-speed interconnections among CPU and other devices. By working together, HBM and CXL will raise computing power and thereby expedite the development of AI applications.

The latest advances in memory pooling and sharing will help overcome the current hardware bottlenecks in the designs of different AI models and continue the trend of more sophisticated architectures. TrendForce anticipates that the adoption rate of CXL-supported Sapphire Rapids processors will reach a certain level, and memory suppliers will also have put their HBM3 products and their CXL-supported DRAM and SSD products into mass production. Hence, examples of HBM-CXL synergy in different applications will become increasingly visible from 2023 onward.

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@trendforce.com

2021-11-04

Annual DRAM Revenue for 2022 Expected to Reach US$91.5 Billion, with Prices Likely to Rally in 2H22, Says TrendForce

Despite the forecasted 18.6% YoY growth in total DRAM bit supply next year, the global DRAM market is still expected to shift from a shortage situation to an oversupply, according to TrendForce’s latest investigations. This shift can primarily be attributed to the fact that, not only are most buyers now carrying a relatively high level of DRAM inventory, but DRAM bit demand is also expected to increase by only 17.1% YoY in 2022. On the price front, the oversupply situation will result in a drop in DRAM ASP in 2022 but not a major decline in annual DRAM revenue, thanks to the oligopolistic nature of the DRAM industry. Annual DRAM revenue for 2022 is expected to reach US$91.54 billion, which represents a slight YoY increase of 0.3%.

Based on an analysis of DRAM sufficiency ratio (which refers to the surplus of supply in comparison with demand) for each quarter in 2022, TrendForce forecasts a 15% YoY decrease in DRAM ASP for 2022, with prices undergoing the more noticeable declines during the first half of the year. Heading into 2H22, however, owing to the rise in DDR5 penetration rate, as well as the arrival of peak seasonal demand, the decline in DRAM ASP will likely narrow. TrendForce does not rule out the possibility that DRAM ASP may even hold flat or undergo an increase in 2H22.

Annual NAND Flash revenue is expected to experience yet another increase next year by 7.4% YoY while numerous suppliers compete in higher-layer NAND Flash market segment

Turning to the NAND Flash market, TrendForce forecasts a 31.8% increase in total bit supply for 2022 and a 30.8% increase in total bit demand. Hence, NAND Flash ASP will likely experience a downtrend next year as a result of the oversupply situation. In addition, due to the perfect competition in the NAND Flash market, the decline in NAND Flash ASP next year will be more noticeable than the decline in DRAM ASP. However, NAND Flash suppliers continues to make progress in the stacking of NAND Flash layers, so the growth in NAND Flash bit supply next year will therefore remain above 30%. TrendForce thus expects NAND Flash revenue to have more room for growth and reach US$74.19 billion in 2022, a 7.4% YoY increase.

TrendForce’s forecast based on an analysis of NAND Flash sufficiency ratios for each quarter in 2022 similarly points to an 18.0% YoY decline in NAND Flash ASP next year. Much like DRAM, NAND Flash prices will undergo the more noticeable declines during 1H22. Arrival of peak seasonal demand in 2H22 will potentially result in a narrowing of price drops and a potential for quarterly prices to hold flat.

On the whole, the revenue performance of the DRAM industry and that of the NAND Flash industry over the years show that the annual total DRAM revenue is growing at more stable pace. Again, this has to do with the oligopolistic structure of the DRAM market. Since the DRAM market has a different competitive landscape, the fluctuations in the overall DRAM ASP have been relatively modest over the long run. However, the development of the DRAM manufacturing technology is approaching a physical bottleneck as process nodes shrink below the 20nm level. This means that the bit growth derived from the deployment of a more advanced process is becoming more and more limited over the years. On the other hand, not only are NAND Flash suppliers relatively more unstable in their capacity expansion plans compared to the DRAM industry, but further improvements in NAND Flash layer-stacking technology also remains feasible. Hence, the fluctuations in the overall NAND Flash ASP have been relatively more volatile over the long run. On account of these factors, the DRAM industry generally has smaller YoY revenue growth rates compared with the NAND Flash industry, although the DRAM industry continues to surpass the NAND Flash industry in terms of profitability.

Profitability of suppliers may be constrained if total revenue fails to keep pace with continuously rising CAPEX

Regarding the CAPEX (capital expenditures) of DRAM suppliers, there has been a gradual increase in these suppliers’ CAPEX to sales ratio in recent years, for two reasons. First, the development of the DRAM manufacturing technology is approaching a physical bottleneck. Die improvements have become more and more limited after process nodes have shrunk below the 20nm level. Micron’s 1alpha nm process can offer an almost 30% increase in bits per wafer, but the 1Xnm-to-1Ynm migrations and the subsequent 1Ynm-to-1Znm migrations that the major suppliers have undertaken in the recent period have yielded increases of no more than 15% in bits per wafer. Looking at future technological developments, Samsung and SK hynix have already integrated EUV lithography into their most advanced process technologies. However, orders for EUV lithography tools have a much longer lead time, and the costs of these tools are also high. Hence, the three dominant suppliers have allocated a large chunk of capital expenditure in advance to place orders for EUV lithography tools ahead of time.

Secondly, the oligopolistic structure of the DRAM market has also helped establish a regime where there is a very low chance of a supplier’s ASP dipping under its fully-loaded cost despite the recurrence of the cyclical price downturn. Moreover, DRAM suppliers have accumulated a substantial amount of profit from their products. In view of the difficulties in die shrinking, suppliers ranging from the three dominant suppliers to others with less market share (such as Nanya Tech and Winbond) have developed tangible plans for capacity expansions. These plans have, in turn, become the other main driver behind the ongoing increase in the CAPEX to sales ratio.

The CAPEX to sales ratio of NAND Flash suppliers have likewise risen substantially following the transition to 3D NAND technology in 2017. Notably, the average CAPEX to sales ratio fell within the 25-30% range prior to 2017, but it has since climbed to nearly 40% as of now. This growth can primarily be attributed to the fact that, as the number of 3D NAND layers increases, there is a corresponding increase in the lead times of NAND Flash products and in the degree of precision as well as difficulty involved in the etching process. While the mainstream layer count of NAND Flash products approaches 1YY layers, suppliers are currently planning to move forward with the development of products with 2XX layers, which place an ever-increasing demand on etch depth. The CAPEX of NAND Flash suppliers will continue to grow alongside increases in layer count and revenue.

TrendForce indicates that NAND Flash layer-stacking technology will continue to progress, meaning suppliers will continue to pursue the stacking of additional layers as a way to lower their manufacturing cost per GB. As such, the NAND Flash industry’s CAPEX will have additional potential for growth going forward, with a CAPEX to sales ratio of close to 40% or above. It should be noted, however, that if total NAND Flash revenue fails to keep pace with the growth in CAPEX in the next few years, NAND Flash suppliers’ CAPEX to sales ratio may potentially undergo an excessive increase, thereby constraining the profitability of suppliers.

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@trendforce.com

2021-10-12

DRAM Prices Projected to Enter Period of Downswing in 2022 as Demand Lags Behind Supply, Says TrendForce

DRAM contract prices are likely to exit a bullish period that lasted three quarters and be on the downswing in 4Q21 at a QoQ decline of 3-8%, according to TrendForce’s latest investigations. This decline can be attributed to not only the declining procurement activities of DRAM buyers going forward, but also the drop in DRAM spot prices ahead of contract prices. While the buying and selling sides attempt to gain the advantage in future transactions, the DRAM market’s movement in 2022 will primarily be determined by suppliers’ capacity expansion strategies in conjunction with potential growths in demand. The capacity expansion plans of the three largest DRAM suppliers (Samsung, SK hynix, and Micron) for 2022 are expected to remain conservative, resulting in a 17.9% growth in total DRAM bit supply next year. On the demand side, inventory levels at the moment are relatively high. Hence, DRAM bit demand is expected to grow by 16.3% next year and lag behind bit supply growth. TrendForce therefore forecasts a shift in the DRAM market next year from shortage to surplus.

Total DRAM bit supply is projected to grow by 17.9% in 2022 in light of DRAM suppliers’ low inventory levels and resurging demand in the server market

As buyers expanded their DRAM procurement in 1H21 in response to supply chain disruptions, DRAM suppliers were able to register better-than-expected shipment performances and reduce their inventory levels considerably. These suppliers are now bullish on the growth of DRAM bit demand generated by the resurging server market. In particular, while Samsung and SK hynix have marginally increased their wafer input for DRAM products, DRAM suppliers’ process technologies are continuing to migrate towards the 1Z nm and 1alpha nm nodes. TrendForce therefore expects total DRAM bit supply to increase by 17.9% YoY in 2022.

Most of Samsung’s wafer input growth takes place in the P2L fab, which houses relatively large physical spaces. As the prevailing market leader, Samsung will likely continue to increase wafer input for DRAM products going forward. The company’s DRAM bit supply growth for 2022 is expected to reach 19.6%, the highest out of the three dominant suppliers, despite the relatively modest growth in Samsung’s current wafer input, most of which comes from advanced process technologies. It should also be pointed out that Samsung’s newest fab P3L is expected to be fully built by mid-2022. P3L will likely contribute to DRAM production by a limited amount next year but continue to provide further growth for Samsung’s DRAM supply after 2023.

Given the bear market for DDR3 memory, SK hynix will likely speed up the reallocation of wafer capacity from DRAM to logic IC products at its old M10 fab next year. After kicking off DRAM production at its newest M16 fab this year, SK hynix will see its total production capacity for DRAM chips continue expanding in 2022, although the company will also adjust its DRAM output according to the state of the market. SK hynix is currently focused on raising the yield rates of its 1Y nm and 1Z nm process technologies, which will contribute to the forecasted 17.7% increase in SK hynix’s total DRAM bit supply next year.

The latest expansions at Micron’s A3 fab are primarily undertaken as a safeguard against possible wafer losses during the fab’s upcoming transition to next-gen process technologies. Hence, Micron’s total production capacity will unlikely undergo drastic changes for the 2021-2022 period, and growths in its DRAM bit output will be mostly derived from the increased yield of the 1Z nm and the latest 1alpha nm process technologies. In addition, DRAM products manufactured with Micron’s 1alpha nm process technology have been widely adopted by clients, and Micron has been making the fastest progress in terms of process technology migration among the three largest DRAM suppliers. The company is expected to increase its DRAM bit supply by 16.3% next year.

Regarding Taiwanese suppliers, Nanya Tech is expected to finalize the construction of its new fab in 2024, while Winbond’s new fab is expected to kick off only pilot runs in 2H22. Taiwanese suppliers are therefore expected to make very limited contributions to the increase in total DRAM bit supply in 2022.

DRAM bit demand is expected to increase by merely 16.3% in 2022, as the bear market for various products results in a high base period in 2021

The smartphone, server, and notebook computer segments comprise the three largest sources of DRAM consumption. All three product categories have been seeing tremendous growth in 2021, thereby resulting in a high base period for comparison against next year’s figures, meaning that significant YoY growths in these products’ production and shipment, and subsequently their DRAM consumption, for 2022 are unlikely to take place. Furthermore, the ongoing shortage of components has continued to affect various industries and constrain device assembly, leading to a decline in demand for DRAM, since OEMs/ODMs are carrying a relatively high level of DRAM inventory. For 2022, DRAM bit demand is expected to increase by only 16.3% and lag behind DRAM bit supply.

Regarding smartphones, while the shortage of key components such as chipsets and driver ICs remains unresolved, total smartphone shipment for 1Q22, which is already a period of cyclical downturn, will fall below expectations. Although the upcoming release of new models is expected to bring about quarterly increases in smartphone production, TrendForce’s current forecast indicates an annual production volume of about 1.4 billion units for 2022, a modest 3.5% YoY growth. This forecasted figure will likely be subject to additional declines if the shortage of semiconductor components extends further. As such, the main growth driver of mobile DRAM demand in 2022 is expected to be the increase in “content per box” (which refers to the total DRAM contained within each individual handset). For 2022, mobile DRAM will account for approximately 40% of total DRAM bit consumption; there will likely be a 15% increase in mobile DRAM bit demand as well. This increase represents a relatively sluggish performance, as mobile DRAM demand generally increased by more than 20% YoY in previous years.

The server industry likewise faced supply chain-related issues, including disruptions in server assembly operations based in Southeast Asia, as well as shortages of PMICs and passive components. With these issues projected to persist through 2022, total server shipment is expected to increase by 4.3% in 2022, primarily thanks to CSPs’ data center expansions. On the other hand, the rise in Intel Ice Lake CPUs’ market share this year has led DRAM suppliers to manufacture more high-density dies (16Gb mono die) due to the server market’s surging demand for 64GB modules. Once Intel’s next-gen Xeon server CPUs, Sapphire Rapids, enter the market next year, the penetration rate of 64GB server DRAM modules is expected to surpass 60%. Hence, server DRAM bit demand is projected to increase by 20% in 2022, the highest among all DRAM product categories.

Annual shipment of notebook computers for 2022 is projected to reach 222 million units, a nearly 7% YoY decrease, owing to increased vaccination rates in Europe and North America. However, as WFH and distance education become the norm, annual notebook shipment will undergo some growth in the medium to long term, without falling back down to pre-pandemic levels. Although Chromebooks remained the fastest-growing product category among all notebooks in 1H21, demand for Chromebooks has been steadily declining in 2H21 due to the increased Chromebook inventory carried by distribution channels in response to high demand for educational notebooks in 1H21. Instead, demand has shifted to commercial notebooks, which are equipped with more DRAM capacity, and this shift will persist through 2022. Total PC DRAM bit demand is expected to increase by more than 15% next year.

DRAM revenue for 2022 will likely be mostly flat as bit shipment growth offsets decline in quotes

On the whole, DRAM suppliers have performed exceptionally well this year in terms of bit shipments thanks to OEMs’ energetic stock-up activities. The annual total revenue of the DRAM industry is also projected to surpass US$90 billion in 2021 because of the price uptrend and the growth in bit shipments. However, the DRAM market will begin to see prices falling in 4Q21 and a sharpening downtrend in 1H22. The overall ASP of DRAM products for the whole 2022 is projected to register a YoY drop of 15-20%. On the other hand, the YoY growth rates of DRAM suppliers’ bit shipments will also be within a similar range for next year. This means that the bit shipment growth will mostly offset the price decline, thereby keeping the total DRAM revenue for 2022 at a similar level to this year. There are still uncertainties as to the movements of DRAM prices during 2H22. If prices manage to rally, then the annual total DRAM revenue may again reach a new high.

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@trendforce.com

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