© Trendforce Components | November 21, 2018
DRAM industry: Manufacturers’ profitability may approach peak
The total revenue of the global DRAM industry grew by 9% QoQ, and again hit a new record high in 3Q18, reports DRAMeXchange, a division of TrendForce.
The survey of the price trends in the third quarter shows that contract prices in the mainstream application segments (i.e. PC, server, and mobile) maintained QoQ increases of 0-2%. Particularly, the contract price of mainstream DDR3 consumer DRAM was the first to drop during the quarter because of the weakening demand. Also, contract prices of graphics DRAM products fell by around 3% QoQ due to the sharp drop in the demand related to cryptocurrency mining as well as the higher base of the previous quarter. The revenue growth of the quarter was attributed to the increased bit shipments rather than rising prices, which had been the main cause of the strong climb in the industry’s revenue during the past period of more than two years. In fact, prices practically flattened out in 3Q18 as the market supply has been steadily expanding in the second half of the year. As for the last quarter of 2018, contract prices started to slide in October and will keep falling through 4Q18, thus ending the upswing that had lasted for more than two years. Moreover, the future price declines will be rather steep because the market has entered oversupply and is experiencing high inventories as well. Against this backdrop, DRAMeXchange anticipates that the slump in contract prices will worsen in 1Q19, since excess inventories are still being carried by memory suppliers, downstream OEMs, and the channel market during that period. With prices reaching the inflection point and starting to turn downward, divergence has appeared between the large and small memory suppliers with respect to their performances. Suppliers that are smaller in scale are generally the first ones to feel the impact of the price decline and take bigger hits in their revenues. Regarding the results of the top three DRAM suppliers for 3Q18, Samsung as the market leader again posted a new record high. Although there was no significant change in the ASP of its products, Samsung raised its bit shipments by deploying its newly added production capacity. Samsung’s 3Q18 revenue rose by 13.6% QoQ to US$12.73 billion, showing the most impressive results among the top three. With its ASP having risen by just 1% QoQ, SK Hynix grew its revenue by 6.0% QoQ to US$8.15 billion in 3Q18. Together, the two leading Korean suppliers accounted for 74.6% of the global DRAM market in revenue terms. Samsung’s market share was 45.5%, while SK Hynix’s was 29.1%. Micron, which remained third place in the revenue ranking, also increased its bit shipments. The growth of its ASP was relatively flat, however. Micron’s 3Q18 revenue advanced by 6.8% QoQ to US$5.92 billion. Its global market share was 21.1%, showing no noticeable change from the previous quarter. The top DRAM suppliers also took their operating margins to new record highs in 3Q18. Although the increases in their ASPs moderated during the period, they were able to raise their operating margins from the previous quarter by optimizing their cost structures via the use of the more advanced manufacturing technologies. Samsung’s increase was the smallest among the top three because of the low yield rate of its 1Y-nm process that was just deployed in the same quarter. Still, Samsung achieved a new record by a nudge of one percentage point from 69% in 2Q18 to 70% in 3Q18. This result also means that Samsung’s gross margin already surpassed the 80% threshold. SK Hynix raised its operating margin from 63% in 2Q18 to 66% in 3Q18, as it has effectively boosted the yield rate of its 1X-nm process. SK Hynix’s increase was also the largest among the top three. As for Micron, its operating margin came to 62% in 3Q18, up from 60% in 2Q18. The improvement in Micron’s profitability was attributed to the increase in the output share of its 1X-nm process. Looking ahead to 4Q18, the top suppliers are not expected to make new records since their cost reduction efforts will unlikely be enough to offset the effect of plummeting prices. On the technology front, Samsung’s plan for 2018 is to maintain a higher percentage for the 1X-nm production within its total DRAM output. On the other hand, a part of the expanded production capacity at Samsung’s Line 17 and Line 18 (the second floor of the Pyeongtaek plant) will be allocated to the 1Y-nm production. Samsung aims to have the share of 1X- and 1Y-nm production in its total DRAM output reach 70% by the end of 2018, and then the supplier will raise the output share of its 1Y-nm production in 2019. SK Hynix began using its 1X-nm process for mass production at the end of 2017 and focused on raising the yield rate of the technology during 1H18. Significant progress occurred in 3Q18. SK Hynix will finish the construction of its second 12-inch wafer fab in Wuxi at the end of 2018 as scheduled. The new fab will begin contributing to the supplier’s DRAM output in 1H19, but it is not expected to quickly ramp up to full capacity because of the economic uncertainties resulting from the US-China trade dispute. Micron’s subsidiary Micron Memory Taiwan (formerly Rexchip) has all of its production capacity on the 1X-nm process. For its next step, Micron Memory Taiwan will bypass the 1Y-nm production and move directly to the 1Z-nm production. However, the 1Z-nm process is not expected to ready for deployment until 2020. Micron’s other subsidiary Micron Technology Taiwan (formerly Inotera) started the migration from the 20nm to the 1X-nm process in 2Q18 and will also begin developing its 1Y-nm technology toward the end of 2018. DRAMeXchange expects Micron Technology Taiwan to gradually raise the output share of its 1Y-nm production in 2019. Regarding Taiwan-based suppliers, Nanya posted a drop of 3.7% QoQ in its DRAM revenue for 3Q18. However, Nanya’s operating margin in the same period increased considerably to 51.0%, up from 46.8% in the previous quarter. This was due to cost improvement associated with the deployment of its 20nm technology. The pressure on Nanya’s profitability is mounting, however, as the supplier faces falling prices and will be paying off the depreciation cost related to its capacity expansion. Powerchip’s DRAM revenue for 3Q18 fell by 13.3% QoQ because the company allocated more its production capacity to make SLC NAND Flash and to provide foundry services for other IC products excluding DRAM. Powerchip currently finds the latter two businesses more profitable than selling DRAM. Winbond’s DRAM revenue for 3Q18 did not change noticeably from the previous quarter. Its bit shipments and ASP also remained stable.
More information can be found at Trendforce.
More information can be found at Trendforce.
Intel nabs former GlobalFoundries, IBM executive Intel Corp has hired former IBM chip exec and GlobalFoundries CTO Gary Patton to its team.
Yokogawa UK partners with power supply manufacturer TDK-Lambda Yokogawa UK has signed a distribution deal with TDK-Lambda. Through Yokogawa’s distribution channels, customers across the UK will now have access to TDK-Lambda’s range of laboratory power supplies.
Denso & TMC launches JV to develop in-vehicle semiconductors DENSO Corporation and Toyota Motor Corporation have named the joint venture to be established in April 2020 MIRISE Technologies. Through the JV the companies aims to to contribute through the development of advanced semiconductor electronics technologies.
Murata to cease production at several subsidiaries Saitama Murata Manufacturing – previously Toko, Inc. – a wholly-owned subsidiary of Murata Manufacturing is ceasing production at its production subsidiaries Shantou S.E.Z. Huajian Electronics and Hua Jiuh Technology by the end of 2019.
KORE Wireless picks up Integron KORE Wireless Group announced the acquisition of Integron, an IoT solutions and managed services provider specializing in the connected health market.
Aixtron qualified for MicroLED production at PlayNitride PlayNitride Inc., has qualified Aixtron's AIX G5+ C MOCVD system for the manufacturing of GaN-based (gallium nitride) MicroLEDs.
memsstar ships MEMS production system to University of Freiburg memsstar Ltd., a provider of etch and deposition equipment to manufacturers of semiconductors and MEMS,has shipped its three-chamber ORBIS 3000 system for MEMS research and manufacturing to the Department of Microsystems Engineering (IMTEK) of the University of Freiburg, Germany.
Vishay's plant in Turin, Italy, receives R&D grant Vishay Intertechnology’s facility in Borgaro Torinese, Italy, has received an industrialisation of research results (IR2) R&D grant from the EU and the Regional Government of Piedmont.
MacDermid Alpha acquires Kester Connecticut-based MacDermid Alpha Electronics Solutions has announced the acquisition of Kester, a global supplier of materials used in electronics assembly and semiconductor applications.
LuminaLED opens new production facility The company officially opened the doors to its new production facility in Chisinau, Moldova on the last day of November.
LeddarTech partners with First Sensor to accelerate LiDAR deployment LeddarTech, a LiDAR platform provider, has entered into a strategic collaboration with First Sensor AG, a developer of advanced sensor solutions that is also now joining the Leddar Ecosystem.
Digi-Key extends partnership with Precogs Electronics component distributor, Digi-Key Electronics has renewed its partnership agreement with Paris-based startup, Precogs.
Rambus completes acquisition of the Verimatrix's silicon IP Rambus has completed acquisition of the silicon IP, secure protocols and provisioning business from Verimatrix, formerly Inside Secure.
Osram invites ams to talks about the future Following the successful takeover offer from ams AG, Osram’s Managing Board has invited the management of ams to make the journey together to becoming a global technology powerhouse for sensor solutions and photonics on the basis of the Business Combination Agreement.
Marvell completes sale of Wi-Fi connectivity business to NXP Marvell has completed the sale of its Wi-Fi Connectivity business to NXP. The divestiture encompasses Marvell's Wi-Fi and Bluetooth technology portfolios and related assets.
Cadence to acquire AWR from NI Cadence Design Systems and National Instruments have entered into a definitive agreement under which Cadence expects to acquire AWR Corporation, a wholly owned subsidiary of National Instruments (NI).
Nidec completed acquisition of Roboteq Nidec Corporation has completed the acquisition of 90% ownership of Roboteq Inc., a U.S.-based designer of ultra-low voltage (ULV) drives, from its owners through Nidec Motor Corporation.
Vesper's ZPL technology included in Alexa-enabled headset Acoustic sensors developer, Vesper, has had its proprietary ZeroPower Listening (ZPL) technology certified by Amazon for extended battery and far-field voice interactions. Vesper's piezoelectric MEMS microphones are powering the first hands-free, extended battery life Alexa-enabled headset that uses ZPL technology.
AutoChips & X-FAB launch mass production of China’s first TPMS chipset AutoChips Inc., a Chinese automotive electronics chip design company (and a subsidiary of NavInfo), in partnership with X-FAB Silicon Foundries, has successfully initiated volume production of a Tire Pressure Monitoring System (TPMS) chipset.
Sumitomo launches 150mm GaN-on-SiC production with Aixtron system Japanese group Sumitomo Electric Device Innovations, Inc. (SEDI) has ordered an AIX G5+ tool from Aixtron, with 8x6-inch wafer configuration in order to expand the production capacity of GaN-on-SiC (gallium nitride-on-silicon carbide) radio frequency (RF) devices for wireless applications.
Green light for NXP’s acquisition of Marvell’s wireless connectivity assets NXP Semiconductors N.V. and Marvell have cleared all necessary hurdles and received the required regulatory approvals for NXP’s acquisition of the wireless connectivity portfolio from Marvell.
Murata continues to expand its Okayama operations A production building that had been under construction since October of last year has been completed at Murata’s production subsidiary Okayama Murata Manufacturing, in Setouchi City, Okayama Prefecture.Load more news