Global Information Inc. would like to present a new market research report, "DRAMeXchange Market Intelligence Service" by TrendForce.
According to DRAMeXchange, a research division of TrendForce, PC-ODM shipment figures indicate this years peak shipment period for PCs has passed. Notebook shipments have shown a downtrend in October, indication that DRAM demand is slipping. As 4GB modules are now the mainstream specification, price decline was more significant than for the 2GB modules; average 4GB price fell by 1.54% to US$16, while the lowest price broke the US$16 mark, arriving at US$15.75, amounting to a mere US$0.83 for 2Gb chips - nearly the same as spot price. 2GB module price, on the other hand, stayed the same at US$9.25. As module prices fall to such lows, DRAM suppliers are strategically focusing on high-density 4GB module shipments in hopes of stimulating sales due to content per unit increases.
Due to macroeconomic influences, DRAM makers chip prices are either approaching or have already broken cash cost, but demand has yet to pick up. DRAM suppliers plans to reallocate PC DRAM capacity have been disrupted, as the market remains in oversupply. As 2013 approaches, manufacturers are engaging in strategic planning for next year, and TrendForce indicates that even industry leader Samsung is highly conservative towards next years capex and bit growth figures. In addition to slowing technology migration plans to the 28nm process, Samsung will only migrate to the 25nm process prior to the advancement to EUV technology. Priority will be placed on profit margins, and advanced process technology will be used primarily for mobile DRAM production. Clearly, the industry focus has shifted from PC to mobile DRAM. Looking ahead to 2013, TrendForce believes that after the storm gradually settles, only the strongest suppliers will remain, which will help bit output closer to the levels of post-PC era demand.
In past years, due to PC upgrade cycles, DRAM suppliers had no choice but to continually advance technology and optimize cost. From the mainstream 60nm process in 2009 to the current 30nm process, every year manufacturers cycled through 1 to 1.5 generations. However, as a result of both a weak global economy and declining PC shipments, and more recently, cannibalization from smartphones and tablet PCs (which has extended the average PC upgrade cycle from 2 to 3 years to 4 to 5 years), DRAM makers have been unable to significantly improve sales.
As for DRAM supply, technology migration has resulted in greater output, which in turn has created a continual oversupply situation on the market these last few years. DRAM industry value continues to shrink, the majority of manufacturers have suffered heavy losses, and capex figures are decreasing every year. The 30nm process is currently the mainstream technology for market share dominators Samsung and SK Hynix, while the 20nm process is not expected to see over 50% output until after the second quarter of 2013 due to design difficulties. As Samsungs 20nm technology is being used mostly for the production of server and mobile memory, commodity DRAM output on the 40nm and 30nm processes will continue. Thus, next years bit supply growth forecast is a mere 19%, significantly lower than it has been in recent years. Micron and Elpida are currently migrating to the 30nm process; Elpida has finished client testing, and will gradually ramp up production in the coming months.
Taiwanese manufacturers, who have experienced the greatest losses, are slowing technology migration and decreasing PC DRAM production. Nanya plans to phase out commodity DRAM, turning instead to specialty DRAM production and foundry business. Powerchips commodity DRAM shipments have decreased significantly as well; capacity is currently down to 20K wafers per month. If manufacturers all slow output, TrendForce forecasts 2013 yearly bit supply growth will hit a low of 22.2%.
Currently, the DRAM industry is still a perfect competitive market. With acute oversupply, buyers have the upper hand in price negotiations. Both contract and spot prices for 4GB modules have fallen to historical lows, but neither market has picked up. There is a limit to how much lower price can fall; capacity cuts must be made to shrink supply. In the long term, manufacturers must all make capacity adjustments and lower capex if the DRAM industry is to return to a healthy state in 2013.
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