Q3 Sees Contract Prices Hit Rock Bottom, Fueling Buyer Interest and Boosting DRAM Revenue

According to TrendForce investigations, the DRAM industry experienced a significant leap in 3Q23, with total revenues reaching US$13.48 billion—a remarkable 18% quarter-on-quarter growth. This surge can be attributed to a gradual resurgence in demand, prompting buyers to ramp up their procurement activities. However, looking ahead to Q4, suppliers are anticipating price hikes, with DRAM contract prices expected to rise by approximately 13-18%. Despite this, demand recovery in the upcoming peak season is not expected to be as robust as in previous years.

While there is still demand for stockpiling, the procurement outlook for the server sector remains uncertain due to high inventory levels. As a result, limited growth is expected in DRAM industry shipments for Q4. Nonetheless, three major manufacturers experienced revenue growth in Q3. Samsung saw its revenue increase by about 15.9% to US$5.25 billion, thanks to stable demand for high-capacity products driven by advancements in AI and the rollout of its 1alpha nm DDR5.

SK hynix exhibited the most notable growth among manufacturers, with a 34.4% increase in revenue, reaching approximately US$4.626 billion. This significant growth has narrowed the market share gap between SK hynix and Samsung to less than 5%. Micron also saw its revenue rise by approximately 4.2% to US$3.075 billion, supported by an upswing in demand and shipment volumes, despite a slight drop in ASP.

In order to address high inventory levels, Samsung expanded its production cuts by the end of Q3, mainly focusing on DDR4 products. These production cuts are expected to intensify to 30% in Q4, leading to a reduction in overall wafer inputs. However, anticipating demand recovery in the second half of 2024, Samsung plans to increase wafer inputs starting from 2Q24.

SK hynix, on the other hand, benefited from a growth in shipments of HBM and DDR5. The company expects a slight uptick in capacity and wafer inputs by the end of this year, with a steady quarterly rise next year in line with the growing market penetration of DDR5. Micron, having already reduced its production earlier, currently maintains relatively healthy inventory levels. The company has started increasing its wafer inputs in 4Q23, with a focus on the 1beta nm advanced process. It is estimated that wafer input volume will continue to rise modestly in 2024, with an emphasis on transitioning to more advanced manufacturing processes.

In Taiwan, Nanya’s shipments benefited from orders from PC clients and spot market momentum, resulting in a growth of 17-19%. However, subdued demand for its mainstream DDR3 and DDR4 products, coupled with declining prices, limited its revenue growth to a modest US$244 million. Winbond, on the other hand, pursued an aggressive pricing strategy to expand its DDR3 business and absorb new capacity from its KH factory. This strategy led to shipment growth and boosted its Q3 revenue to US$112 million.

It is worth noting that PSMC primarily calculates its revenue from consumer DRAM products it manufactures, excluding DRAM Foundry services. The company experienced a slight increase in demand, benefiting from the rise in spot prices, resulting in a 4.4% quarterly increase in DRAM revenue. However, when including revenue from DRAM foundry services, there was a 5.5% decrease this quarter.

Background Information

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About Samsung:

Samsung, a South Korean multinational conglomerate, has established itself as a global leader in various industries, including electronics, technology, and more. Founded in 1938, Samsung's influence spans from smartphones and consumer electronics to semiconductors and home appliances. With a commitment to innovation, Samsung has contributed products like the Galaxy series of smartphones, QLED TVs, and SSDs that have revolutionized the way we live and work.

  

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About SK hynix:

SK Hynix is a important South Korean semiconductor company known for its innovative contributions to the global technology landscape. Specializing in the production of memory solutions, SK Hynix has played a vital role in shaping the semiconductor industry. With a commitment to research and development, they have continuously pushed the boundaries of memory technology, resulting in products that power various devices and applications.

  

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Technology Explained

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DDR3: DDR3 (double data rate 3) is a type of computer transfer technology that is commonly used in modern computers. It is the successor to the original DDR and DDR2 technologies used to communicate data between the main memory and the CPU (central processing unit). It works by allowing two sets of information to be sent per clock 'tick', which helps to boost overall speed and efficiency. With DDR3, the computer industry has seen a significant increase in speed and performance. DDR3 is used in a variety of computer applications, from gaming to intense data processing and artificial intelligence tasks. It is used in PCs, laptops, and Macs, as well as in tablet technologies like the iPad. It also helps to provide better video streaming and signal data processing in networking. DDR3 is an essential and versatile technology in the modern computer industry.

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DDR4: DDR4 is a generation of Double Data Rate (DDR) dynamic random access memory (RAM) technology. It is a type of RAM that utilizes a higher clock frequency and is more power-efficient than its predecessors. As a result, it is capable of processing data more quickly than other RAM in the computer industry. Its increased speed and power efficiency are beneficial for applications such as gaming, rendering, and machine learning. It is designed for high-performance computing and enables faster access to stored information, resulting in better overall performance for the user. Furthermore, because of its low voltage requirements it requires less power consumption, making it an attractive option for many computer systems. DDR4 is set to become the primary RAM in most computer systems as the industry transitions away from its predecessors.

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DDR5: DDR5 (Double Data Rate 5) is the next generation of memory technology for the computer industry. It is a modern day improvement on earlier DDR technologies, with faster speeds, greater bandwidth and higher capacities. DDR5 enables higher resolution, seamless gaming experiences and faster data transfer rates, making it an ideal choice for high-performance computing and 4K gaming. With its greater RAM compatibility, DDR5 provides faster buffering times and raised clock speeds, giving users an improved overall work system. DDR5 is also optimized for multi-tasking, allowing users to multitask without experiencing a significant drop in performance, increasing the productivity of digital tasks. As an ever-evolving technology, DDR5 is paving the way for the computer industry into a new and powerful era.

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Foundry: A foundry is a dedicated manufacturing facility focused on producing semiconductor components like integrated circuits (ICs) for external clients. These foundries are pivotal in the semiconductor industry, providing diverse manufacturing processes and technologies to create chips based on designs from fabless semiconductor firms or other customers. This setup empowers companies to concentrate on innovative design without needing substantial investments in manufacturing infrastructure. Some well-known foundries include TSMC (Taiwan Semiconductor Manufacturing Company), Samsung Foundry, GlobalFoundries, and UMC (United Microelectronics Corporation).

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