© andrzej thiel dreamstime.com Analysis | October 09, 2014
DRAM industry profits to stabilize
Construction of Samsung and SK Hynix's new fabrication plants will be finished in 2015, and next year's plans for manufacturing capacity are currently being changed, according to DRAMeXchange, a division of Taiwan-based market intelligence firm TrendForce.
The significant increase in capacity at Samsung's Line17 fab initially scheduled for the second quarter of 2015 was delayed. Production will begin at 10K wafer starts per month in 2Q15 and increase gradually, reaching 40K wafer starts per month by the end of the year. The incremental capacity increases will help stabilize profit structure and allow for immediate product mix adjustments. However, the ratio of 20nm production is on the rise and the next-gen process is more complex than older technology. As Samsung's older plants do not have room for new manufacturing equipment, capacity may decrease. Thus, despite the extra capacity from Line17, reduced capacity at current fabs means Samsung's total capacity in 2015 will likely remain roughly the same as this year's, with yearly growth dependent on technology migration. SK Hynix's new M14 fab will also be completed in 2015, and equipment is expected to be moved in around the middle of the year. The memory maker is in the same boat as its top competitor. Indeed, as manufacturing difficulties increase with migration from the 25nm to the 21nm process, capacity will decrease at older plants, leading to no significant yearly capacity growth despite the addition of a new fab. The 25nm process will remain SK Hynix's mainstream technology next year. Advancement to the 21nm process will begin in mid-2015 at the earliest, and yearly growth will come from technology migration, not capacity expansion. Micron, with its strict cost control and profit-based strategy, does not have capacity expansion plans for 2015. Migration to the 20nm process next year will take place mainly at Inotera (commodity DRAM) and the Hiroshima fab (mobile DRAM), with no 20nm production at Micron Memory Taiwan. With a risk-averse operational strategy, Micron is expected to experience the weakest growth among DRAM manufacturers next year. As DRAM manufacturers are cautiously boosting manufacturing capacity, the industry should be able to avoid massive price fluctuations and see stable profit in 2015.
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