Global DRAM revenue dropped 1.2 percent in Q3

The average selling price of DRAM continues to decline due to market oversupply. However, manufacturers are reallocating production capacity from PC DRAM – which has experienced the greatest price decline – to server DRAM and mobile DRAM as the latter two application markets are seeing more stable prices and higher margins. This strategy, along with continuing bit supply growth, prevented the global DRAM industry from suffering a significant revenue loss in the third quarter. Quarterly revenue decline was only 1.2 percent based on the latest analysis from DRAMeXchange, a division of TrendForce. Moreover, the share of mobile DRAM in the total revenue expanded greatly from 33.7 percent in the second quarter to 40 percent in the third quarter. Avril Wu, DRAMeXchange assistant vice president, said the share of mobile application in the overall DRAM production will increase corresponding to the growth of smartphone shipments in the fourth quarter. However, the market will be affected by negative seasonal headwinds in the following period. Manufacturers will also increase the bit supply by producing on the 20/21nm processes. Thus, the oversupply problem will worsen and DRAM prices will continue to decline in the near future. Dominant suppliers are pushing their costs down, aggravating the supply-demand imbalance and keeping margins low The two Korean memory makers’ operating margins did not change much in the third quarter – Samsung’s was 47 percent and SK Hynix’s was 36 percent. Micron’s operating margin, on the other hand, dropped notably from 21 percent in the second quarter to 15 percent in the third quarter. As for market share, Samsung remained in the lead with 47%, while SK Hynix came in second with 28 percent. Micron took roughly 19 percent of the market. Wu noted that Samsung’s 20nm production in the third quarter not only included PC and server products but LPDDR4 mobile DRAM as well. By becoming the first manufacturers to supply LPDDR4 made on the 20nm process, Samsung will have significant cost advantage as the market is experiencing falling prices. SK Hynix has already sent 21nm samples its clients and mass production is expected to begin in the first or second quarter of next year. The 21nm will likely make a major contribution to the manufacturer’s overall production. Micron is the furthest behind in technology as its 20nm process is making small batches of server DRAM and samples of PC DRAM (which will later be verified by clients). ----- More can be found at Trendforce.