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Components | August 10, 2012

Koreans take 77.5% of Mobile DRAM market

According to DRAMeXchange, the popularity of smartphones and tablet PC products has stimulated mobile DRAM demand growth in the second quarter of 2012.
Although mobile DRAM contract price fell by approximately 10% QoQ in the first quarter, mobile memory revenue unexpectedly increased by 12.4% QoQ. The revenue growth can be attributed to manufacturers allocating more capacity to mobile DRAM production as well as demand stimulation from increased low to mid-end smartphone shipments.

Looking at mobile DRAM revenue figures for the second quarter, Samsung remains on top with nearly 60% of the market. The Korean memory makers’ combined revenue accounts for 77.5% of the global mobile DRAM market, 1.1% less than the first quarter. Third-place manufacturer Elpida’s market share fell by a slight 0.8% to 13.9%.

Benefitting from low to mid-end smartphone growth, U.S. supplier Micron’s market share increased by 6.7%, putting the maker in fourth place. As for Taiwanese DRAM makers, Winbond has already been producing mobile DRAM for some time, and now Nanya has entered the mobile memory sector as well.

Unfortunately, due to the bleak economic outlook for the second half of the year, manufacturers are becoming more conservative with regard to production and development plans, preparing instead for the worst DRAM winter since 2009.

Samsung Semiconductors’ Market Share Nears 60%, Korean Makers Shine

Samsung’s 2Q mobile DRAM market share is 59.6%, approximately the same as the previous quarter’s figure. Benefitting from Samsung’s increase of mobile DRAM shipments, the maker’s total DRAM revenue increased by 12.2% QoQ.

From the market perspective, smartphone shipments recovered in the second quarter and Samsung’s Galaxy series is the global leader in smartphone shipments, providing a satisfactory outlet for the Korean maker’s sizable mobile DRAM capacity.

Currently, Samsung’s mobile DRAM product lines, including LPDDR1 products, are on the 35nm process. As the maker continues to increase yield rates and diversify its product mix to improve profitability, Samsung is expected to remain at the top of the mobile DRAM market.

SK Hynix’s mobile DRAM revenue increase by 6.4% QoQ to US$350 million, accounting for 20.5% of its total memory revenue. The maker’s market share was 17.9%, a 1% QoQ decrease, but its operating margin was positive for the first time in several quarters, indication that the maker is experiencing improved profitability.

However, mobile DRAM average selling price (ASP) falls by over 10% per quarter, which presents a difficult challenge to cost structure.

SK Hynix’s 38nm yield rate increase has boosted profits as well as low to mid-end smartphone demand, which in turn stimulates multi-chip packaging (MCP) product shipments. Together, Samsung and SK Hynix have over 70% of the mobile DRAM market.

New Micron Group Targets Low, Medium, and High-End Smartphone Segments

Elpida’s 2Q mobile DRAM market share was 13.9%, a 6.4% QoQ increase, putting the maker in third place in the global DRAM market. As Elpida has advanced mobile DRAM process technology, the maker should be able to bounce back from its financial troubles.

The merger with Micron is mostly settled, and Elpida has received new orders from clients, among which Apple has increased mobile DRAM orders for the iPhone by nearly 50%, which will certainly help the Japanese supplier get back on its feet. Elpida’s prior lack of NAND flash products will be remedied through its partnership with Micron, and production of MCP products will enable the maker to break into a previously untapped market.

Diversity has always been a characteristic of Micron’s mobile DRAM product lines, especially in regards to low-density MCP products, which are widely adopted in low to mid-end smartphones. Benefitting from rapid demand growth for low to mid-end smartphones in the second quarter, Micron’s revenue rose by 50% to US$130 million, pushing market share to 6.7%, a 5% increase. Additionally, Micron’s 30nm LPDDR2 products are currently in the client testing phase; the new specification will likely help increase revenue from high-density products in the future.

Looking at chip developers, industry leader MediaTek’s low to mid-end smartphone chips mostly use MCP packaging, but the arrival of high-end quad-core chips next year will lower development costs for high-end smartphones. If Micron and Elpida are able to effectively integrate their NAND flash and high-density mobile DRAM product lines, the makers will be able to expand in the rapidly growing low, mid, and high-end smartphone sectors, thereby expanding their market share significantly.

At present, the suppliers must focus on capacity adjustments and product line restructuring in preparation for market oversupply in the second half of the year. Based on initial calculations, combined capacity for U.S., Japanese, and Taiwanese memory makers exceeds 30K wafers per month, which puts them in second place and indicates the mobile DRAM market may see changes in the future.

Product Mix Adjustment Key to Profitability for Taiwanese Suppliers

Having licensed Micron’s mobile DRAM technology, Nanya is developing 30nm LPDDR2 products. Nanya’s mobile DRAM production contributed to its revenue for the first time this quarter; albeit only a 2% contribution. Nonetheless, the arrival of another Taiwanese supplier on the mobile DRAM market is significant news.

Winbond’s mobile DRAM revenue increased by 1.5% QoQ, mainly from its 65nm products manufactured for the feature phone market. In the second half of 2012, Winbond plans to develop 46nm LPDDR1 (512Mb). Looking at Winbond’s financial report for the quarter, the maker’s revenue and profits are both steadily increasing; the manufacturer is focusing resources on technology migration to continue improving profitability.

However, the Taiwanese manufacturers lack complete memory product lines (no NAND flash), and they must license technology from other manufacturers, which results in higher costs. If they are unable to develop diverse product combinations, it will become increasingly difficult to compete on the mobile DRAM market, and all too easy to fall into a vicious cycle if resources are spread too thin.

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