© TrendForce Analysis | February 18, 2020
Global DRAM revenue holds steady in 4Q19
The DRAM inventory finally returned to a relatively normal level for most OEMs in 4Q19 after nearly three consecutive quarters of adjustments, says the DRAMeXchange research division of TrendForce.
As the growth in the industry’s overall DRAM supply will be fairly limited in 2020, buyers have been raising procurement ahead of time. Therefore, despite the relatively strong base period in 3Q19, DRAM suppliers increased their sales bits in 4Q19. This increase was able to largely offset the declines in their quotes. All in all, 4Q19 global DRAM revenue registered a minor decrease of 1.5% QoQ, showing a relatively flat trend compared to the previous quarter. Now, in the first quarter of this year (1Q20), contract prices of PC DRAM and server DRAM products have rallied as PC OEMs and cloud service providers remain fairly proactive in building up their inventories. However, DRAM suppliers’ shipment performances in 1Q20 will be affected by the usual seasonal headwinds of Lunar New Year break in Asia. The three dominant DRAM suppliers are expected to post a QoQ decline in their sales bits for the period. From the revenue angle in 4Q19, the QoQ growth of Samsung’s server DRAM shipments was lower than that of its chief competitors; its sales bits for the period increased by just 2-3% QoQ, while its ASP saw a QoQ drop. Samsung’s revenue retreated by 5% QoQ to USD 6.76 billion. SK Hynix’s sales bits grew by around 8% QoQ, which more than offset the QoQ drop of its ASP. The company’s revenue increased by 2.9% QoQ to USD 4.54 billion. Micron’s sales bits increased by nearly 10% QoQ, with revenue reaching USD 3.47 billion – a 2.1% increase QoQ. From the profitability standpoint, almost all suppliers with the sole exception of Samsung failed to achieve a turnaround in 4Q19 mainly because their ASPs fell again by magnitudes of 7-8% versus the previous quarter. Samsung managed to increase its operating margin against headwinds to 36% from 33% in the third quarter due to the cost reduction associated with its transition to the 1Y-nm production. Additionally, Samsung managed to recover some of the write-off in connection with the quality issue of its 1X-nm process. Conversely, SK Hynix has seen its profitability negatively affected by the cost incurred during the course of its transition to the 1Y-nm production. For this supplier, the yield rate has been low during the early phase of the technology migration. SK Hynix posted the largest decline in operating margin among the top three suppliers, dropping to 19% from 24% of the previous quarter. Micron’s operating margin for its fiscal 1Q20 (September to November) was 20%, down from 24% in the previous fiscal quarter. The decline in Micron’s ASP was similar in magnitude to the declines experienced by the two Korean suppliers in their fiscal 4Q19 (October-December 2019). Moving to 1Q20, there is now a possibility that rising quotes could improve suppliers’ profitability. However, the uptick in prices is expected to be marginal, so improvements in suppliers’ operating margins will unlikely be significant. On the matters of technology and production, Samsung will be scaling back DRAM production at Line 13 by allocating more of the facility’s wafer capacity to CMOS image sensors (i.e., the same policy for Line 11). However, the second fab of the Pyeongtaek base (P2L) will begin volume production in 2H20 to offset the production cut at Line 13. Around that same time, Samsung will also start the migration to the 1Z-nm technology. Samsung’s total DRAM production capacity by the end of this year will not change much from the end of last year. Since Samsung still has a cautious outlook, the share of the 1Z-nm production in its overall output will not expand significantly this year. SK Hynix’s production plan for 2020 involves shifting the wafer capacity of M10 from DRAM to CMOS image sensors and raising DRAM wafer starts at M14. SK Hynix will probably maintain a conservative approach for the two new fabs in Wuxi because of the ongoing US-China trade dispute as well as the recent COVID-19 epidemic. On the technology front, SK Hynix will be focusing on advancing to the 1Y-nm technology this year. With respect to Micron’s plans for 2020, its subsidiary Micron Memory Taiwan (formerly Rexchip) is mainly producing on the 1X-nm process, but it will be upgrading to the 1Z-nm technology, thus skipping the 1Y-nm stage altogether. Micron’s other subsidiary Micron Technology Taiwan (formerly Inotera) now has more than 50% of its output based on the 1X-nm production. It is also in the midst of advancing to the 1Y-nm technology, which now makes up about 30% of its output. Turning to the performances of Taiwan-based suppliers in 4Q19, in comparison with a relatively strong base period in 3Q19, Nanya’s sales bits suffered a QoQ decreased in 4Q19. Moreover, the company’s ASP registered a decline. Nanya posted a QoQ decline of 9.3% in revenue. Nevertheless, Nanya has a positive outlook for 1Q20 and expects a turnaround in its revenue result for the period. Nanya believes it will be able to achieve a QoQ growth for both ASP and sales bits in the first quarter. Winbond’s DRAM revenue also fell by 9.8% QoQ owing to weaker-than-expected sales of its new 25nm products and sliding ASP. Powerchip’s DRAM revenue (from own branded, in-house manufactured PC DRAM, excluding foundry DRAM orders) registered a QoQ decline of around 20%. Powerchip continues to transfer wafer capacity from DRAM to CMOS image sensors as the demand for the latter products are stronger. This strategy squeezes its DRAM output and shipments.
Royal Flex Circuits boosts effort to support healthcare Santa Fe Springs, California-based Royal Flex Circuits is ramping up capacity at its year-old manufacturing facility to be produce more of the printed circuits needed in the production of ventilators used specifically in the treatment of Coronavirus.
Lam Research reacts to COVID-19 situation Fremont, California-based Lam Research Corporation has issued a business update for its quarter ending March 31, 2020.
Panasonic,Tesla scaling down production in Nevada In response to Panasonic’s announcement this week of a temporary, full suspension of production of its operations at Tesla’s Gigafactory in Nevada, Tesla also issued a statement that it would significantly decrease production at the site.
NOTE temporarily suspends production at Windsor plant Swedish EMS provider NOTE has, in line with the UK authorities' decision to limit all non-essential travel and work, temporarily halted its production at its manufacturing facility in Windsor.
Texas Instruments adjusting operations in Texas Texas Instruments is following a Dallas County shelter-in-place order and reducing operations at the company’s Dallas-area plants.
European EV battery production gets a boost from the EIB The European Investment Bank (EIB) has signed a EUR 480 million loan agreement with LG Chem Wroclaw Energy, the Polish subsidiary of the LG Chem Group that was established to develop the group’s battery production facility in Europe.
Würth Elektronik CBT produces PCBs for ventilators The worldwide spread of the coronavirus is not only increasing the demand for personal protective equipment, but also for medical ventilators.
North American PCB industry sales down 1.1% in February Total North American PCB shipments in February 2020 were down 1.1% compared to the same month last year.
U.S. may further crimp Huawei's global chip supply Senior Trump administration officials have reportedly agreed on new restrictions to curb the global supply of chips to China’s Huawei Technologies, sources are saying.
Tesla to reopen NY plant to make ventilators Tesla has joined industry efforts to shift production from autos and other non-healthcare related components to much needed supplies that support the domestic battle against rising numbers of coronavirus victims and the need for testing.
Bosch develops rapid test for COVID-19 Developed in just six weeks, Bosch says the rapid test can detect a COVID-19 infection in patients in under two and a half hours – measured from the time the sample is taken to the time the result arrives.
Lockdown in India halts production at Foxconn and Wistron Both EMS giants are complying with the nationwide lockdown ordered by Prime minister Narendra Modi. Both Foxconn and Wistron have now suspended production at their plants in India.
NAND Flash ASP may tumble in 2H20 ahead of expectations The continued spread of the COVID-19 pandemic has resulted in considerably weakened shipment for most end products in 1Q20, according to the DRAMeXchange research division of TrendForce,
Beijer Electronics takes preventive measures – downsizes workforce Beijer Group says it has increased its readiness and is taking measures to address the currently assessed consequences of the spread of COVID-19.
COVID-19 forces Lacroix to close several plants The French EMS provider says it is taking appropriate steps to limit the spread of COVID-19, safeguard its teams and, as far as possible, ensure business continuity for its customers.
PVA joins growing list of companies helping fight COVID-19 Upstate New York-based PVA has ramped up efforts to supply solutions for the shortage of COVID-19 test kits, portable respirators, and mechanical ventilators.
Applied Materials walks back Q2FY20 business outlook Applied Materials Inc. is withdrawing its business outlook for the second quarter of fiscal 2020, ending on April 26, 2020, due to the changing worldwide response to COVID-19 and its impact on the company’s supply chain and manufacturing operations.
Getting creative: Ford, 3M, GE, UAW unite to battle COVID Ford Motor Company, 3M and GE Healthcare are brainstorming ways to engineer and manufacture medical equipment and supplies for front line healthcare workers and responders, as well as patients fighting coronavirus.
Hamamatsu Photonics establishes subsidiary in Korea Hamamatsu Photonics Korea Co., Ltd. has been established as a subsidiary to strengthen the sales structure for its Imaging and Measurement Instruments business in South Korea.
Serial production & prototype construction continues at Akasol Akasol says it will maintain its serial production as well as prototype and sample construction for the time being, despite the current crisis related to COVID-19; but with stricter precautions related to health and safety.
Bittium receives purchase order from the Finnish Defence Forces Bittium has received a purchase order from the Finnish Defence Forces for the Bittium Tactical Wireless IP Network (TAC WIN) system's products, which are meant for tactical communications.
Italian restrictions creates uncertainties for GPV’s Swiss factory As of the March 23, GPV’s production site in Mendrisio is unable to operate due to further restrictions imposed by the Italian government as well as from the government of the canton Ticino in Switzerland in an attempt to combat the spread of COVID-19.
Incap temporarily reduces capacity in the UK Following new strict guidelines announced by the British government on Monday 24 March to contain the COVID-19 pandemic in the UK, Incap will temporarily reduce the operations of its Straffordshire factory in the UK to focus on production of medical and scientific instruments only.
II-VI ups capacity for diagnostic testing systems II-VI Incorporated, a provider of lasers, optics, thermoelectrics, and subassemblies for the life sciences market, is ramping up manufacturing capacity of components and subassemblies for molecular diagnostic testing systems for polymerase chain reaction (PCR) testing platforms.Load more news