Little change in 4Q11 DRAM revenue ranking

According to DRAMeXchange, a research division of TrendForce, total 4Q revenue for the global DRAM industry was stable at US$6.45 billion, a 1.7% QoQ decrease. Although 4Q contract price fell by approximately 25% QoQ, first-tier DRAM makers decreased the proportion of commodity DRAM production to less than 50% early on, significantly reducing losses from plummeting commodity DRAM prices and making room for more profitable mobile and server DRAM, thereby enabling 4Q revenue to match last quarter’s figures. From the profit perspective, only Samsung benefitted from strong mobile DRAM growth in 4Q, while the remaining DRAM makers continued to show losses. At the end of 4Q, the DRAM industry experienced a second wave of capacity cuts to lower commodity DRAM wafer start volume and reduce cash outflow. From the supply and demand perspective, 4Q overall chip production increased by approximately 4% QoQ. However, as HDD shipments were affected by the Thailand flood disaster in 4Q, PC shipment figures fell by 10.4% QoQ. Weaker than expected performance resulted in DDR3 4GB average contract price fell from US$24 in 3Q to US$18, a decrease of approximately 25%. Benefitting from the rise of smartphones and tablet PCs, mobile DRAM price only fell by 10% QoQ. LPDDR2 8Gb average price was approximately US$17.4, showing stronger demand than commodity DRAM. As DRAM manufacturers remain cautious regarding the 2012 price trend, capex figures were lowered by 33%, from last year’s US$8.5 billion to US$5.7 billion for 2012. Additionally, makers actively adjusted product packaging and decreased the proportion of commodity DRAM production. Global DRAM Manufacturers Branded DRAM Revenue Ranking Looking at the global branded DRAM revenue ranking, Korean maker Samsung remained in first place. Although affected by the DRAM price decrease in 4Q, with additional support from mobile and server DRAM, Samsung’s 4Q revenue decreased by a mere 2.8% QoQ. However, DRAM market share remained at approximately 44.3%. As for technology migration, Samsung leads the industry into 28nm-node production, which is expected to account for over 50% of production by the end of the year, and it should help further increase market share. Hynix’s market share increased from 21.6% in 3Q to 23.3%, the sales increase mainly due to the 38nm process officially entering mass production. Additionally, the decreased proportion of commodity DRAM and continual increase of mobile and server DRAM production contributed to Hynix’s 6.4% growth as well. As for Japanese maker Elpida, since commodity DRAM still accounts for over 60% of production, the manufacturer was heavily impacted by the contract price decline. Elpida’s 4Q revenue fell by approximately 6.3% QoQ, and market share decreased from 3Q’s 12.6% to 12%. Elpida’s financial difficulties have been widely discussed; the maker is due to repay a JPY$120 billion debt in April. Whether the Japanese government steps in, Elpida’s creditors extend the loan, or the maker allies with Toshiba or Micron, the developments will be worth keeping an eye on. Micron, on the other hand, saw a slight increase in market share, from 11.8% to 12.1%. As Micron is on good terms with U.S. clients and the proportion of revenue from server DRAM is not low, total revenue was stable. However, after the recent loss of CEO Steve Appleton’s strong leadership, the company will surely face internal adjustments, and rumored cooperation with Elpida will likely be postponed. Looking at Taiwanese manufacturers, Nanya’s 4Q revenue fell by 4.9% QoQ, while market share stayed more or less the same at approximately 3.6%. Lagging behind first-tier makers on process technology by at least a generation, Nanya has considered increasing the proportion of specialty DRAM production and gradually reducing commodity DRAM. Powerchip has become a dedicated foundry, backing out from the branded product market. While the maker continues to produce commodity DRAM, the proportion is not high, and Powerchip will focus on foundry business and flash production in the future. Winbond’s 4Q revenue fell by 17.6% QoQ, mainly due to impact from the Thailand flood-induced HDD shortage. The proportion of specialty DRAM decreased significantly, but as HDD shipments continue to recover in 1H12, performance outlook is conservatively optimistic. Branded DRAM Market Share by Region Looking at branded DRAM market share by region, benefitting from Hynix’s 4Q revenue increase, Korean manufacturers’ combined market share accounted for 69.2% of the market, an increase of 1.3% QoQ. U.S. makers’ total market share increased to 12.3%, while Japanese and Taiwanese manufacturers’ saw decreased total market share, at 12.3% and 6.3%, respectively. The decrease in Taiwanese market share was especially noticeable due to some makers decreasing commodity DRAM production and transitioning to foundry business. Overall, Korean makers’ market share continues to increase; as expected, the biggest keeps getting bigger.