© Gajus Dreamstime Analysis | January 16, 2019
A sharper price decline of nearly 20% is expected for 1Q19 in DRAM market
The overall price trend in the DRAM market has been stable in December, showing no noticeable change from November, reports DRAMeXchange, a division of TrendForce. But looking forward, we see a drastic change.
Clients in North America and Europe were taking a break during the year-end holiday season, so the quantities of DRAM products traded in December were too small to be considered in the survey of contract prices. With regard to contract prices of mainstream products, the monthly average of 8GB modules is staying roughly at USD 60, while that of 4GB modules is around USD 30. However, for both 8GB and 4GB ones, their monthly lows have already dropped below their respective USD 60 and USD 30 thresholds. DRAM suppliers and OEMs have already begun to discuss prices for the first-quarter contracts since last December. Taking account of the high inventory, the weak demand, and the pessimistic economic outlook for the medium to long term, both sides have reached a general consensus that prices of 8GB modules for the first-quarter contracts will be around USD 55 or even lower. This implies that the average contract price of 8GB modules will drop by at least 10% MoM in January, and there is a strong possibility that prices will continue to fall in February and March. For the DRAM price trend in 1Q19, DRAMeXchange expects a quarterly decline of nearly 20%, steeper than the previous forecast of 15%, with the most noticeable decline in the segment of server DRAM. At present, the biggest problem in the DRAM market is not the growth of the industry’s bit output, but the earlier arrival of the traditional slow season in 4Q18, which has resulted in increasing inventory level earlier than expected. Among the major DRAM suppliers, Micron witnessed the biggest drop in prices in 4Q18, which lowered its inventory level timely. In comparison, South Korean-based suppliers experienced the lowest price fall and thus lower shipments, which may lead to considerable inventory level throughout 1Q19. For the short term, the supply bit growth will remain constantly higher than sales bit growth, so the inventory level will keep rising, and the prices will keep falling. This price downtrend may even last for more than four quarters from 4Q18. With oligopoly in DRAM market, module makers will face lower profitability Contract prices of DRAM products have turned downward since 2H18, but further price competition in the highly concentrated DRAM market would only harm the suppliers’ high profitability. Therefore, DRAM suppliers have scaled back their CAPEXs for 2019 so as to stabilize the prices and moderate the oversupply. It should be noted that the distribution of the profit across the DRAM supply chain has been heavily skewed toward the memory suppliers in 2018. On the whole, the trend of rising prices that lasted for more than two years before 4Q18 has not produced significant gains for clients in the downstream. For memory module makers, most did very well in 2017 because the short-term price surge during the early phase of the price uptrend allowed them to translate their low-price inventories into profits. However, module makers were unable to extract profits from the price differences of memory chips at the start of 2018 because DRAM prices by then had become excessively high. Their profitability became dependent on just the additional processing work. As DRAM prices have now swung downward in 2H18, module makers carrying high inventories have been exposed to losses in each successive month. With revenues dropping, many of them are projecting that their actual profits for this year will shrink to around one tenth of last year’s (some are also expecting an annual loss). Going forward, 2019 will be even more challenging for module makers and the rest of the supply chain.
For more information visit TrendForce.
For more information visit TrendForce.
Dymax Corp. expanding into North Carolina Global chemical manufacturer Dymax Corporation has pledged to create dozens of new jobs at a new production site in Gaston County, Commerce Secretary Anthony Copeland has announced.
Philips, U.S. Gov team up to combat COVID-19 The Netherlands-based Royal Philips and the U.S. Government have announced they will collaborate to produce hospital ventilators at Philips’ U.S. manufacturing locations.
Datwyler adjusts its capacity at Mobility plants Datwyler says it is doing everything possible to protect the health of its employees, combat the spread of the coronavirus, and prevent interruptions to business operations. Adding to that the company is adjusting the capacity, cost structures and capital expenditure at its Mobility business unit.
EMA Design Automation partners with Dassault Systèmes EMA Design Automation says it has entered into a partnership with Dassault Systèmes. The companies will work towards the joint mission of connecting teams across a common data model for unified product development and collaboration.
Zollner Elektronik secures Nadcap Accreditation once again Zollner Elektronik AG has once again been successful in achieving renewed accreditation in accordance with the AC7120 international audit program of the National Aerospace and Defense Contractors Accreditation Program (Nadcap).
tbp does its part to speed up delivery of respiratory equipment Since the outbreak of COVID-19 in the Netherlands, tbp electronics has accelerated the supply of crucial components to clients in the medical sector.
OJ Electronics affected by Malaysian lockdown Danish OJ Electronics, a designer and developer of electronic controls for underfloor heating and HVAC controls and power, says that it has – until now – managed to keep its production and supply chain activities up running, without any significant impact on deliveries.
Medtronic plans to make ventilators together with Foxconn Within four to six weeks, the medtech company is expecting to be producing ventilators together with the Taiwanese EMS-giant at its plant in Wisconsin.
U.S. chipmaking industry seeks to slow export rule changes Nine semi-conductor industry groups urged U.S. Commerce Secretary Wilbur Ross slow the momentum to finalizing recently proposed rules that would further limit U.S. exports of semiconductors and other technology to China.
Flex Ltd. sets goal of 30,000 ventilators a month Silicon Valley-based Flex Ltd. has started mass assembly of critically needed ventilators to meet surging demand for the machines across the United States in the wake of the coronavirus pandemic.
Elvia PCB supports the fight against COVID-19 with PCBs European PCB manufacturer, Elvia PCB Group, has been working non-stop since the beginning of the COVID-19 pandemic. The company is part of a project to manufacture thousands of ventilators by mid-May.
Neways Electronics Neunkirchen introduces short-time work Neways Electronics Neunkirchen (NEN) in Germany, is responding to the consequences of the COVID-19 outbreak and will be introducing short-time work from April 1st, 2020.
European semiconductor sales up 2.4% in February 2020 The European Semiconductor Industry Association (ESIA) says that European sales of semiconductors reached USD 3.323 billion in February 2020, an increase of 2.4% compared to the January 2020 total of USD 3.247 billion.
Hisense Gorenje extends production shutdown Hisense Gorenje says that it is extending its production shutdown at all its factories in Europe for another week.
Plexus starts production of ventilators in Scotland EMS provider Plexus is participating in the UK government’s efforts to expedite the manufacturing of ventilators in aide of the fight against COVID-19.
NCAB appoints Peter Kruk as new CEO Following the announcement late last year that Hans Ståhl planned to retire in 2020, the board of NCAB Group has now found his successor. Peter Kruk will be taking over as the new CEO of the PCB supplier.
Comtech Telecomm Corp. issues business update New York-based Comtech Telecommunications Corp. has issued a statement on the withdrawal of its business outlook for its fiscal year ending July 31, 2020, as well as an update on its proposed purchase of the Gilat Satellite Networks Ltd.
Xerox provides HP acquisition update Xerox has issued a statement regarding its earlier proposal to buy HP Inc.
As Samsung Display exits the LCD market a major reshuffle is expected According to the latest investigations by the WitsView research division of TrendForce, the oversupply of TV panels in 2019 resulted in a major price drop. As such, panel manufacturers hoped to utilise their excess capacity in 2020 through increasing their production of monitor panels, with Samsung Display (SDC) having the most extensive plans.
Swedish PCB manufacturer updates machine park PCB manufacturer MMAB’s factory in the south of Sweden recently got a new drilling area with updated machines.
Ventec races to build up regional inventories to fight COVID-19 The electronics industry is playing a major role in supporting increased requirements for critical medical devices during the current COVID-19 pandemic. And with that an increase in demand of the building blocks is to be expected.
Elmatica sees a spike in demand - responds with growth in staff Growing demand, new customers and an increase in business within knowledge intensive industries, has reinforced the need for another Country Manager in Poland, a new Technical Manager and an additional resource in the Customer Service Department.
Co-operation negotiations completed at Etteplan Etteplan initiated co-operation negotiations on March 18th 2020 due to temporary changes in customer demand caused by the COVID-19 pandemic. Now, the negotiations have come to a complete.
Indian electronics company support the fight against COVID-19 Indian engineering and technology solutions company, Cyient, says it’s received clearance for its Mysore facility to run its MedTech manufacturing lines to support the production of medical equipment critical in the fight against COVID-19Load more news