© wrangler dreamstime.com Analysis | April 20, 2017
Global Server DRAM ASP in 2Q17 to rise over 10% QoQ
DRAMeXchange, a division of TrendForce, reports that demand continues to outpace supply in the server DRAM market. In this first quarter, memory suppliers saw their shipment fulfillment rates dropped for different groups of clients.
The fulfillment rate for long-term agreement (LTA) orders was 80 percent on average, while fulfillment rates for orders from Chinese and Taiwanese ODMs fell to the 60 percent level. Due to the persistent undersupply, DRAMeXchange further projects that the global average sales price (ASP) of server DRAM will increase by more than 10 percent between the first and second quarter. “The product mix changes made by suppliers in the second half of 2016 as the main factor behind the tightening of server DRAM supply,” said Mark Liu, DRAMeXchange analyst. “At the same time, the demand from the downstream has taken off and surpassed DRAM suppliers’ expectations. As server makers expand their purchasing of memory products, server DRAM prices will keep climbing.” Up to now, major DRAM suppliers have been adjusting the pace of their respective technology migrations as to align with the product lifecycles of their mainstream offerings for the server memory market. Samsung and SK Hynix have not significantly shifted the production of their server DRAM chips onto the more advanced processes, which respectively are the 18nm and the 21nm. Both Samsung and SK Hynix have also limited the shipment share of products from the advance process. For this first quarter, just around 30 percent of Samsung’s server DRAM product shipments came from the 18nm process. SK Hynix also had about the same shipment share for its 21nm server DRAM products. Looking ahead, the uncertainty of the supply-demand situation will further push up server DRAM prices in the third quarter. Domestic telecom industry and BAT will increase their take of China’s server shipments to 36 percent this year The Internet’s traffic has grown exponentially in recent years as more services migrated to cloud computing and big data platforms, thus creating enormous challenges in data storage and processing. Traditional data centers lack the equipment and technologies to handle the current density of information that is being transmitted. In the case of China, the three native technology giants Baidu, Alibaba and Tencent – a group also known as “BAT” – have become actively involved in the development of the domestic data center market, including the design and manufacturing of network equipment and server systems. They also work closely with local telecom companies in creating their enhanced and customized operational models for data centers. At the same time, data center-related services in China have matured. Owing to policy support from the government, domestic providers of cloud computing, online storage, IoT services and other combined solutions have made much progress. In the near future, various levels of Chinese government in accordance with the national economic strategy are expected to invest heavily in cloud-based technologies and related emerging industries. Enterprise data centers are being built across the country, and many of these data center building projects contain lucrative bid opportunities from provincial governments. On the whole, China’s data center market is now entering a high-growth period. Similarly, demand for server systems in China is expected to grow significantly in the near term. DRAMeXchange estimates that the demand for server from domestic telecom companies (e.g. China Telecom, China Mobile and China Unicom) will increase by around 30 percent this year in unit volume compared with last year as they continue to work closely with server ODMs. Domestic telecom companies are also projected to capture 5~8% of the total server shipments in the Chinese market during 2017. An even larger source of server demand in China comes from BAT. Together, their server demand for 2017 is expected to grow by 20 percent in unit volume versus 2016. They also will take a huge chunk of the total server shipments in the Chinese market this year – around 30 percent according to DRAMeXchange’s latest estimate. Going forward, demand momentum from China’s telecom industry and BAT will pick up further in the second half of 2017. ----- Read more at Trendforce.