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© fotosonar dreamstime.com Analysis | May 29, 2014

DRAM industry value nearing USD 10 billion in 1Q14

The DRAM market became highly profitable last year after transforming into an oligopoly, according to DRAMeXchange, the memory and storage research division of TrendForce.
The entire Q1 industry value grew 2% QoQ to reaching new heights at US$ 9.94 Billion. SK Hynix, one of the industry's largest DRAM manufacturers, managed to show a highly noteworthy performance following its recovery from last year's fire accident with operating margin growth jumping from 29% to 36%. As other DRAM manufacturers display similarly impressive performances this year, 2014 is considered an optimal for the entire DRAM industry, TrendForce predicts that the total DRAM industry value will grow 30% YoY to approximately US$ 45 Billion.

DRAM Manufacturer Highlights

Samsung: Samsung is known to be the earliest company in the industry to migrate towards 25nm manufacturing technology and is currently expected to raise its 25nm production yield to over 50% for 1H 2014. Mass production involving the Korean company's next generation 23nm and 21nm technologies are anticipated to occur at some point during 2H 2014. Although the industry’s average price decline has caused Samsung’s revenues to drop by 7% QoQ during 1Q14, the Korean giant’s overall profit growth has remained relatively strong due to its effective cost structure. For the entire 1Q14, Samsung’s DRAM profits rose by approximately 21% QoQ.

SK Hynix: due to its Wuxi Plant's full recovery, the successful transition made from 38nm to 29nm technology, and the low base period in the fourth quarter, SK Hynix's Q1 revenues and profits jumped by 21% QoQ and 28% QoQ, respectively. The company is currently producing 25nm wafers on a large scale, and is expected to gradually raise their proportion throughout the second half of 2014.

Micron: the New Micron Group is continuing to maintain a steady presence in the DRAM market. Although its revenues remain relatively unchanged from the previous quarters, the company was able to improve its Q1 profits by an impressive 21% QoQ with its optimized product mix. The majority of Micron's products are currently still manufactured using the 30nm manufacturing process. In 2H 2014, the former Elpida fab will begin to make a massive transition towards 25nm technology, whereas the original Micron facilities are expected to begin testing the 20nm process during 4Q 2014. The mass production for the 20nm products is expected to begin at some point during 1H 2015. In the upcoming periods, the New Micron Group will be expected to place the majority of its focus on Mobile DRAM and Server DRAM products, both with greater profitability.

Nanya: despite shifting its main focus to Specialty DRAM, Nanya was able to reserve a good portion of its production capacity for PC DRAM, and managed to perform relatively well during 1Q 2014. Even though the company's Q1 revenues dropped 8% compared with the previous quarter, its overall profits still grew significantly by 34% QoQ.

Winbond: benefiting from the impressive sales of Specialty DRAM and small density Mobile DRAM, Winbond saw its revenues jump by an estimated 6.2% QoQ. Revenue growth for Mobile DRAM, in particular, was approximately 17%, whereas Specialty DRAM's revenue growth also reached 6%. In 2014, Winbond will be expected to continue raising its capital expenditures. as more and more opportunities arise within the market. Other than focusing on increasing wafer output to 40K, the company will be making an effort to migrate towards the 46nm manufacturing process. With lowered manufacturing costs, the company has a good chance of raising its profits by as much as 25% this year.

Powerchip: Powerchip's DRAM revenues grew 42% from the previous quarter, partly due to moving an immersion scanner to the P1+P2 plants that are intended for PC DRAM production. In the future, Powerchip will continue to adjust its OEM and PC DRAM output based on the condition in the market.

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