Samsung


2021-10-20

NAND Flash Prices Projected to Enter Cyclical Downturn in 2022 Due to Modest Demand Growth and Competition for Higher-Layer NAND, Says TrendForce

Contract prices of NAND Flash products are expected to undergo a marginal drop of 0-5% QoQ in 4Q21 as demand slows, according to TrendForce’s latest investigations. Hence, the current cyclical upturn in NAND Flash prices will have lasted for only two consecutive quarters. Looking ahead, NAND Flash suppliers’ capacity expansion plans will be affected by the outlook on future trends and the supply of other non-memory components. At the same time, attention will have to be paid to the demand projection. At the moment, NAND Flash suppliers appear likely to downsize their capacity expansion activities for 2022, resulting in a 31.8% YoY increase in NAND Flash bit supply next year. Annual bit demand, on the other hand, is projected to increase by 30.8% YoY. With demand being outpaced by supply and competition intensifying among suppliers for higher-layer products, the NAND Flash market will likely experience a cyclical downturn in prices in 2022.

YoY Growth of bit supply for 2022 is projected to reach 31.8% as competition for higher-layer NAND Flash remains fierce

With demand surging for a significant part of this year, customers have accelerated their adoption of higher-layer NAND technologies. Suppliers have also revised their production plans several times so as to raise output, reaching a YoY growth of nearly 40% in total NAND Flash bit supply in 2021. In light of the somewhat high base for comparison and the relatively weak demand outlook next year, TrendForce expects annual NAND Flash bit supply to increase by only about 31.8% YoY in 2022.

NAND Flash bit demand will grow by just 30.8% due to high base for comparison and factors related to arrival of post-pandemic era

The analysis of the demand side of the NAND Flash market finds that the shipment volumes of smartphones, notebook computers, and servers have been undergoing robust growths in 2021, resulting in a relatively high base period for comparison against next year’s figures. Hence, substantial YoY increases in device production or shipment in 2022 will be difficult. In addition, the procurement side still suffers from mismatched availability of components. With NAND Flash supply being relatively healthy and device manufacturers carrying a growing NAND Flash inventory, NAND Flash procurement for the upcoming period will likely be limited. TrendForce expects NAND Flash bit demand to increase by 30.8% YoY in 2022, which represents a slower growth compared with the increase in NAND Flash bit supply.

Regarding the smartphone market, the persistent shortage of components, including chipsets and driver ICs, is expected to exacerbate the decline in smartphone shipment during the traditional off-season of the first quarter. As for the average storage capacity of handsets, one driver of growth is the iPhone series, which is adopting a 1TB solution for the first time with this year’s line-up (i.e., iPhone 13 Pro/Pro Max). This will encourage brands in the Android camp to follow suit and have a 1TB solution featured in the future flagship models that are released in 2022, thus slightly increasing the shipment share of high-density solutions. Furthermore, brands in the Android camp will be focusing on pushing models with 256GB or 512GB in response to Apple’s storage upgrade for this year’s iPhone lineup. TrendForce forecasts that the NAND Flash bit demand related to smartphones will rise by around 28.5% YoY in 2022, which is noticeably lower than the growth rates that approached almost 30% for the years prior to 2021.

Regarding the notebook market, orders for notebook computers will enter a period of downward correction in 2022 compared to the peak growth that took place in 2021 as increasingly widespread vaccinations lead to a gradual easing of border restrictions. Although the workforce’s return to physical offices has now generated some upside demand for commercial notebooks, the demand for consumer notebooks and Chromebooks, which are highly contingent on the education sector, will undergo a sharp decline. Taking these factors into account, TrendForce forecasts a modest 23.2% YoY growth in client SSD bit demand in 2022, which falls short of the growth in 2021 by a considerable margin.

Regarding the server market, CSPs’ continued procurement of servers in 2022 is expected to drive up annual server shipment by about 4.5% YoY. In particular, the average storage capacity of enterprise SSDs is expected to experience a more significant growth next year compared to previous years due to the gradual release of new server CPU platforms with PCIe Gen 4 support, which features more PCIe lanes allocated to SSD data transfer. These new CPUs will also come with substantial upgrades in terms of both core count and processing power. Adoption of large-capacity enterprise SSDs enables servers equipped with such CPUs to achieve improved computing performance and in turn allows CSPs to cut down on the number of server nodes required, thereby optimizing the cost of data center build-out. In terms of applications, computing demand from AI and big data will continue growing, and this growth will also contribute to the increase in the average storage capacity of enterprise SSDs next year. In addition to the aforementioned developments, the release of Intel’s Sapphire Rapids platform, which supports PCIe Gen 5, will bring about a further bump in enterprise SSD data transfer speed, as well as average storage capacity, which is expected to increase by 33.5% YoY in 2022.

Annual NAND Flash revenue is projected to increase by merely 7% YoY in 2022 while falling quotes offset growth in bit shipment

NAND Flash ASPs have not shown significant downturns for two consecutive years since 2020. At the same time, as the COVID-19 pandemic drives up the demand for electronic products and cloud services, the overall growth in NAND Flash bit demand has been remarkable, resulting in an annual NAND Flash revenue growth of more than 20% YoY in both 2020 and 2021. Looking ahead to 2022, the YoY increase in NAND Flash bit demand will diminish due to the high base for comparison this year. The NAND Flash market is projected to enter a period of price downturn, with an over 18% decline in NAND Flash ASP. While such a decline offsets the rise in bit shipment, annual NAND Flash revenue will likely increase by merely 7% in 2022, the lowest YoY growth in three years.

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

2021-09-23

NAND Flash Market Will See Falling Quotes and 0-5% QoQ Declines in Contract Prices for 4Q21, Says TrendForce

The latest analysis of the NAND Flash market from TrendForce finds that shipments have been below expectations for consumer electronics such as smartphones, Chromebooks, and TVs during this second half of the year. At the same time, demand remains sluggish for retail storage products including memory cards and USB drives. Data centers and enterprise servers represent the only applications that show relatively strong demand. With the inventory level of the demand side steadily rising, the procurement momentum of NAND Flash buyers will become more constrained going forward. The gradual weakening of demand is also relieving the shortage of NAND Flash controller ICs. Taking account of these factors, TrendForce forecasts that quotes for NAND Flash products will begin to fall in 4Q21, and NAND Flash contract prices will register QoQ declines of 0-5% for that period.

For 4Q21, Contract Prices of Client SSDs Will Drop by 3-8% QoQ, Whereas Contract Prices of Enterprise SSDs Will Rise Slightly by 0-5% QoQ

Countries in North America and Europe are gradually lifting COVID-19 restrictions as their vaccination rates rise. Consequently, schools and businesses in those countries have also reopened and resumed normal operation. Due to this development, the demand for Chromebooks, which are mainly purchased by academic institutions, has started to slide rapidly. The demand for consumer notebook (laptop) computers has slowed down as well. Among different types of notebook computers, only commercial models continue to experience growing demand. On the side of device manufacturers, the shortages of other types of non-memory ICs are disrupting the operations of ODMs. In particular, the prolonged nationwide lockdown in Malaysia has aggravated the undersupply situation for PMICs. This problem not only impacts the production of PCs and notebook computers but also affects the product assembly capacity of some SSD suppliers.

Additionally, NAND Flash suppliers are rapidly raising production capacity for NAND Flash products that are 128 or higher in layer count. As a result, supply is gradually outpacing demand for SSDs. TrendForce believes that suppliers will become increasingly proactive in pricing in order to raise the consumption of their production output by customers and thus prevent excess inventory. Hence, contract prices of client SSDs are forecasted to make a downward turn in 4Q21 and register QoQ declines of 3-8%.

Regarding enterprise SSDs, customers in the data center segment have raised the volumes of their orders for two quarters straight, and their inventories have been climbing steadily as well. Therefore, the demand for enterprise SSDs will start to weaken in 4Q21. The procurement of enterprise SSDs by server OEMs will continue to be sustained by server shipments to medium and small enterprises in 4Q21. However, the total server shipments for the same period will be impacted by the ongoing IC shortage. Server shipments are forecasted to drop by nearly 9% QoQ for 4Q21, and the demand bits related to enterprise SSDs will also fall by 7% QoQ for the same period.

Turning to the supply side of the enterprise SSD market, lead time has been prolonged for the enterprise SSD controller ICs from Intel because Intel’s main base for packaging and testing this kind of chip is located in Malaysia, which is now a COVID-19 hotspot. The situation is not expected to improve in 4Q21, so bit shipments of enterprise SSDs from Intel will shrink from 3Q21. Since Intel’s market share for enterprise SSDs is fairly large, the effect of the recent COVID-19 outbreaks in Malaysia on contract prices of enterprise SSDs will be significant. TrendForce currently forecasts that contract prices of enterprise SSDs will rise by 0-5% QoQ for 4Q21. The hike will be mainly caused by the lack of components on the supply side rather than an increase in demand.

5-10% Reduction Projected for eMMC Prices amidst Significant Drop of End Demand

The demand for major consumer products, such as TVs and tablets, has started to weaken after the conclusion of the traditional peak season of stocking, as well as the gradual withdrawal of subsidization policy from the US. The continuous elevation of the vaccination rate in European and American countries, followed by a progressive mitigation of lockdown measures in various countries and successive resumption of school operations, have yielded an apparent impact to the demand for notebooks and tablets related to education purposes, while the aggravated stocking from the buyers during 1H21 in fear of shortages in NAND Flash controller IC has increased the inventory level and further suppressed eMMC orders. Despite stable capacity for low density 2D MLC NAND, as well as confined supply of NAND Flash controller due to the full load capacity of 28/40nm processes from foundries, the prices have been deprived of support owing to the sizable depletion in end demand, where a prominent decrement of 5-10% is expected for relevant products during 4Q21 after the substantial increase in 2Q21.

0-5% Reduction Projected for UFS Prices amidst Enhanced Supply and Diminished Demand

TrendForce has downward revised the projections to the annual production of smartphones under the fluctuating COVID-19 pandemic status in Southeast Asia. In addition, the stocking demand for new iPhones and flagships of various brands will gradually decelerate upon entering 4Q21, while the peak season of stocking is soon to be transitioned to the imminent off season. Purchase dynamics of UFS are expected to further subside. Regarding supply, mobile clients are currently using similar layers in products to that of PC OEMs after the spontaneous incorporation of 1xxL by different brands during 1Q21, and the provision of products with higher layers is expected to amplify under PC products’ expansion of market satisfaction and the unmitigated component gaps of ODMs. UFS quotations are estimated to deteriorate by 0-5% in 4Q21 under enhanced supply and diminished demand.

NAND Flash Wafer Prices to Sustain the Largest Quarterly Decrease of 10-15% amidst Subsided Demand for Major Applications

The demand performance for retail end products has been sluggish since the beginning of 2021 aside from the temporal nourishment from the related demand for a storage-based cryptocurrency (Chia) between April and May. Memory cards and USB flash drives have been sluggish in sales since 2Q21 due to the successive exacerbation of the pandemic status in India and Southeast Asia, and the sales of retail SSD from channels have been impeded owing to the shortages of graphics cards, which obstructs the bundling with assembled computers. The fluctuation of cryptocurrency prices, for which the plummeting had slightly improved the shortages of graphics cards at one time, has triggered another recovery in the demand for mining, and further inhibits the sales volume of SSD. It is worth noting that the diverted tendency between end products and upstream components has manifested considerable pressure to module houses.

Pressure from the sales of NAND Flash wafer inventory is expected to gradually magnify for suppliers under the worse-than-expected demand for products such as notebooks, smartphones, and TVs. Few suppliers have signaled their willingness in active provision during 4Q21, though the continuously enlarging void of PMIC has instead entangled the shipment of finished enterprise SSD, which intensifies the sales pressure of NAND Flash wafer. Furthermore, YMTC, WDC, and Micron have initiated an active supply of 128, 112, and 176L product samples to module houses for testing and incorporation. The incorporation of higher layers will further refine shipment cost that will obtain additional room in price reduction for suppliers. 3D NAND wafer is expected to sustain the largest depletion among all product categories at 10-15% during 4Q21.

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

2021-09-22

DRAM Prices Projected to Decline by 3-8% QoQ in 4Q21 Due to Rising Level of Client Inventory, Says TrendForce

Following the peak period of production in 3Q21, the supply of DRAM will likely begin to outpace demand in 4Q21, according to TrendForce’s latest investigations (the surplus of DRAM supply is henceforth referred to as “sufficiency ratio”, expressed as a percentage). In addition, while DRAM suppliers are generally carrying a healthy level of inventory, most of their clients in the end-product markets are carrying a higher level of DRAM inventory than what is considered healthy, meaning these clients will be less willing to procure additional DRAM going forward. TrendForce therefore forecasts a downward trajectory for DRAM ASP in 4Q21. More specifically, DRAM products that are currently in oversupply may experience price drops of more than 5% QoQ, and the overall DRAM ASP will likely decline by about 3-8% QoQ in 4Q21.

PC DRAM prices are expected to decline by 5-10% QoQ as market demand for notebook computers weakens

Although WFH and distance learning applications previously generated high demand for notebook computers, increasingly widespread vaccinations in Europe and North America have now weakened this demand, particularly for Chromebooks. As a result, global production of notebooks is expected to decline in 4Q21, in turn propelling the sufficiency ratio of PC DRAM to 1.38%, which indicates that PC DRAM will no longer be in short supply in 4Q21. However, PC DRAM accounts for a relatively low share of DRAM manufacturers’ DRAM supply bits, since these suppliers have allocated more production capacities to server DRAM, which is in relatively high demand. Hence, there will unlikely be a severe surplus of PC DRAM in 4Q21. It should also be pointed out that, on average, the current spot prices of PC DRAM modules are far lower than their contract prices for 3Q21. TrendForce therefore expects an imminent 5-10% QoQ decline in PC DRAM contract prices for 4Q21, with potential for declines that are even greater than 10% for certain transactions, as PC OEMs anticipate further price drops in PC DRAM prices in the future.

Server DRAM prices are expected to decline for the first time this year, by 0-5% QoQ due to high client-side inventory

CSPs in North America and China currently carry more than eight weeks’ worth of server DRAM inventory, with some carrying more than 10 weeks’ worth of inventory, as they procured massive amounts of server DRAM in the previous two quarters to avoid shipment issues with whole server units caused by component shortages. In view of this aggressive procurement effort, the overall demand for server DRAM has gradually slowed, although certain Tier 2 data centers are still procuring server DRAM to make up for previous gaps. As server DRAM buyers continue to gravitate towards destocking their server DRAM inventory in 4Q21, demand will likely fall short of the previous quarters. Furthermore, due to long lead times for certain key components, shipment of whole servers is also expected to undergo quarterly declines. On the supply side, the three major DRAM suppliers (Samsung, SK hynix, and Micron) reallocated some of their production capacity for mobile DRAM to server DRAM in early 2Q21, and this reallocated capacity is expected to gradually begin outputting server DRAM in 4Q21. Given the slowdown in server DRAM demand, contract negotiations for server DRAM procurement in 3Q21 lasted until early August. Although server DRAM contract prices underwent a 5-10% QoQ increase in 3Q21 due to suppliers’ best attempts during contract negotiations, further price hikes going forward are unlikely. TrendForce expects server DRAM prices to undergo a decline for the first time this year in 4Q21 with a QoQ drop of 0-5%.

Mobile DRAM prices are expected to remain relative unchanged from 3Q21 levels despite a possible price drop ahead of time at the end of the year

In light of fluctuations in the COVID-19 pandemic, the global demand for smartphones and the supply of smartphone components are both still at the risk of experiencing declines. In addition, after smartphone brands revised down their production targets at the end of 2Q21, brands and distributors alike have been facing the pressure of high smartphone inventory levels. In response to factors such as pandemic-related uncertainties and declines in mobile DRAM prices for 2022, smartphone brands will slow down their mobile DRAM procurement and prioritize inventory reduction instead. Hence, bit demand for mobile DRAM will decline even further in 4Q21. On the whole, given the uncertain state of the pandemic in the coming winter, smartphone brands will adopt a more conservative attitude towards both smartphone production and component procurement in 4Q21. As a result, even if DRAM suppliers are willing to lower mobile DRAM prices, such an effort will only result in limited sales growths. In addition, mobile DRAM still lags behind other DRAM product categories in terms of profitability, meaning a drop in mobile DRAM prices is unlikely. Taking these factors into account, TrendForce expects prices of discrete DRAM, eMCP, and uMCP to mostly hold flat in 4Q21 compared with 3Q21.

It should be noted that, by the end of the year, DRAM suppliers may potentially start supplying mobile DRAM at 1Q22 prices ahead of time, primarily for two reasons: First, DRAM suppliers will be faced with revenue performance pressures at the end of the year; second, smartphones and DRAM suppliers will enter into new LTAs (long term agreements) for 2022. These factors are expected to impact mobile DRAM ASP for 4Q21 and bring about a price drop ahead of time.

Graphics DRAM contract prices are expected to decline by 0-5% QoQ due to excess supply

Market demand for discrete graphics cards and notebook graphics cards still remains due to the stable market for commercial notebooks and the resurging cryptocurrency mining market, which saw cryptocurrency prices rebounding from rock bottom levels within the past two months. However, severe issues with the availability of components in the graphics card supply chain currently present the most significant bottleneck in graphics card production. In particular, components such as driver IC, PMIC, and other peripheral components are all in shortage, while graphics DRAM is in relative oversupply compared to these other components. Graphics card manufacturers are therefore revising down their graphics DRAM procurement. Consequently, even though DRAM suppliers have not significantly increased their graphics DRAM production, demand from the purchasing end will remain sluggish until the shortage of other components is resolved. Demand for graphics DRAM will unlikely see a resurgence before the end of 2021. On the supply side, the three major DRAM suppliers are primarily focused on GDDR6 for their current graphics DRAM production. As well, graphics card demand from the cryptocurrency mining market is generally aimed at newer graphics cards that feature GDDR6 memory. Accordingly, both production and sales of GDDR5 memory are relatively weak, and this bearish trend is especially reflected in spot prices. As spot prices are the first to enter a downturn, and the aforementioned market conditions lead to sluggish procurement activities, graphics DRAM prices are in turn expected to plummet from previous levels in 4Q21, although this decline is projected at a minor 0-5% QoQ owing to DRAM suppliers’ efforts to keep prices constant.

QoQ decline of DDR4 Consumer DRAM prices is expected to be among the highest drops, at 5-10% as procurement activities decelerate

Gradual easing of lockdowns in Europe and North America has led to a decline in consumer spending on home entertainment applications. This, along with the severe shortage in electronic components, has adversely affected the demand for consumer electronics, such as TVs, STBs (set-top boxes), and networking devices, as well as industrial-use products, thereby also reducing the procurement demand for consumer DRAM. On the other hand, while DRAM suppliers were in the process of transitioning from DDR3 manufacturing to other products, the massive price hike of DDR3 products in 1H21 led DRAM suppliers to slow this transition. Even so, certain market conditions are now placing downward pressure on DDR3 prices, so next year the three major suppliers may potentially speed up the transition of mature DDR3 manufacturing to other products, such as CMOS image sensors or other logic ICs, instead. As server and PC manufacturers’ DRAM inventory level rises, contract prices of those DRAM products will likely decline in 4Q21. Thus, given that the movement of DDR4 consumer DRAM prices is highly correlated with PC DRAM and server DRAM and has been trending relatively high, DDR4 consumer DRAM prices are expected to decline by 5-10% QoQ in 4Q21. Likewise, although the supply of DDR3 consumer DRAM has been gradually decreasing, DDR3 consumer DRAM prices will also undergo an overall decline, particularly for 4Gb chips. DDR3 consumer DRAM prices are expected to decline by 3-8% QoQ in 4Q21.

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

2021-09-02

Global Smartphone Production Declines by 11% QoQ to 307 Million Units for 2Q21 Owing to Impact of COVID-19 Pandemic in Southeast Asia, Says TrendForce

The recent surges of COVID-19 cases in India, Vietnam, and other Southeast Asian countries have adversely affected the global smartphone market in terms of production and demand, according to TrendForce’s latest investigations. The global smartphone production for 2Q21 fell by 11% QoQ to a total of 307 million units. However, a YoY comparison shows an increase of around 10% for the quarter. The global production for 1H21 came to a total of 652 million units, translating to a growth rate of almost 18% compared with 1H20, when the pandemic was in the initial phase.

While fourth-ranked Apple undergoes a transition period between old and new models, and Samsung experiences a slight dip in market share, smartphone brands have improved their respective product specifications

Samsung’s smartphone production for 2Q21 reached 58.5 million units, which was the highest among all smartphone brands yet represented a 23.5% QoQ decrease. Since India and Vietnam account for the majority of its smartphone production capacity, the severe COVID-19 outbreaks in both countries during 2Q21 had a significant impact on production volume. This year, Samsung will remain as the top smartphone brand by quarterly and annual production. However, it will face increasing difficulty in preserving its steadily shrinking market share in the future. The competition will only intensify as rival brands have become excelled at smartphone design and manufacturing.

OPPO’s smartphone production fell by 6.6% QoQ to 49.5 million units for 2Q21. OPPO’s production figure includes devices from sub-brands Realme and OnePlus. Xiaomi’s smartphone production also came to 49.5 million units for 2Q21, showing a QoQ drop of 2%. Xiaomi’s production figure includes devices from sub-brands Redmi, POCO, and Black Shark. On a YoY basis, OPPO posted a growth rate of 80%, whereas Xiaomi posted a growth rate of almost 70%. The high YoY growth rates were attributed to them capturing some market share abandoned by Huawei and the recovery of China’s smartphone market. Both OPPO and Xiaomi claimed second place in the quarterly ranking. Vivo is another Chinese brand that faces a similar situation. Its smartphone production, which includes devices from sub-brand iQoo, dropped by 8.1% QoQ to 34 million units. Vivo took fifth place in the quarterly ranking. Each of these three Chinese brands has made India its second largest base with respect to production and sales operations. Hence, India’s recent COVID-19 surge affected the production and sales performances of all three brands in 2Q21.

Regarding future plans, all three Chinese brands corrected down their annual production targets at the end of 2Q21 due to the COVID-19 surge in Southeast Asia and the capacity crunch in the foundry market. Lowering the annual production target is going to alleviate the cash flow pressure by preventing the component gaps from widening and the inventory of whole devices from rising. It should be pointed out that OPPO, Xiaomi, and Vivo have been very proactive in developing innovative products in the high-end segment of the smartphone market. The high-end models from these three brands are not able to completely assume the market positions that have been held by the flagship models under Huawei’s P and Mate series. Nonetheless, all three brands have posted strong results in both the domestic and overseas markets. To capture more market share, Xiaomi and OPPO are leveraging their respective sub-brands Redmi and Realme that both offer high performance for price. TrendForce therefore believes that these two brands will be more or less evenly matched in terms of production through this whole year.

Apple’s iPhone production reached its lowest point for the year, and its rank fell to fourth place in 2Q21 because the second quarter is the transition period between last year’s and this year’s iPhone series. The quarterly total iPhone production fell by 22.2% QoQ to around 42 million units. In the aspect of product development, Apple will be releasing four flagship iPhone models this September. The major upgrades that come with the new series are the improved camera and the next-generation A15 processor that is manufactured with TSMC’s 5nm+ process. Other upgrades relate to the optimization of the existing functions. This year’s iPhone line-up can be regarded as an extension of the iPhone 12 series that was released in 2020. With regards to pricing, Apple will be maintaining its proactive approach so as to gain more market share. On the other hand, there is the possibility that Apple’s device production during 2H21 will be affected by the recent spike of COVID-19 cases in Malaysia. Due to the severity of the outbreak situation, shipments of ICs from that country have experienced delays.

With an annual production of 9.4 million units for 2021, LG officially terminated its smartphone manufacturing operations in 2Q21

LG signaled that it will be selling or shutting down its mobile phone unit at the start of this year, and then the company announced that it will formally close the mobile phone unit this April. The development of new smartphone models was also suspended. According to the shutdown plan, the production of LG smartphones has ceased since the end of 2Q21. Altogether, LG produced around 9.4 million units this year and is estimated to account for about 1% of the market share. As for LG’s regional markets, the company was focusing on expanding its presence in the respective mid-range segments of the North American and Latin American markets. With LG ceasing its smartphone production, the abandoned market share in North America will be mostly divided among Android phone brands Samsung, Lenovo, and brands owned by local telecom companies. In Latin America, Lenovo and Xiaomi will likely benefit the most from LG’s exit.

Persistent uncertainties in the pandemic’s impact may continue to affect smartphone production in 2H21

Regarding the global smartphone production for the whole 2021, TrendForce has corrected down its estimation from the previous version of 1.36 billion units with a YoY growth rate 8.5% to the current version of 1.345 billion units with a YoY growth rate of 7.3%. Going forward, one of the two main focuses of observation will be on whether the pandemic will cause a further decline in smartphone sales. For instance, while Europe and the US are currently experiencing a resurgence of infections, Southeast Asian countries have also been unable to subdue the most recent outbreaks. In addition, the pandemic continues to pose a risk to the smartphone supply chain. Take Malaysia for example. It accounts for a significant share of the global production capacity for OSAT (i.e., around 15%). With the country now becoming a COVID-19 hotspot, there have been disruptions in the supply of some key semiconductor components. This, in turn, will negatively affect smartphone production during the second half 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@trendforce.com

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