Rising Prices and Volume Drive 30% Revenue Growth for DRAM Industry in 4Q23

The DRAM industry achieved a significant Q4 2023 revenue increase of 29.6%, reaching $17.46 billion, with top manufacturers, such as Samsung, SK hynix, and Micron, experiencing various growth levels, and an anticipated 20% increase in DRAM contract prices for Q1 2024.

29.6% quarter-on-quarter increase in revenue
Projected nearly 20% increase in DRAM contract prices
Positive growth and strategic positioning for future success

According to a recent report from TrendForce, the DRAM industry saw a significant 29.6% quarter-on-quarter (QoQ) increase in revenue during the fourth quarter of 2023, reaching an impressive $17.46 billion. This growth can be attributed to the efforts of leading manufacturers who strategically controlled production and engaged in stockpiling activities. Looking ahead to the first quarter of 2024, the focus seems to be on further enhancing profitability, with a projected nearly 20% increase in DRAM contract prices. However, there may be a slight decrease in shipment volumes due to the traditional off-season.

Among the top manufacturers, Samsung emerged as the leader with the highest revenue growth in Q4. The company experienced a remarkable 50% QoQ jump, reaching $7.95 billion. This surge can be attributed to the increased shipments of 1alpha nm DDR5, which significantly boosted server DRAM shipments by over 60%. SK hynix, on the other hand, witnessed a more modest 1-3% rise in shipment volumes. However, the company benefited from the pricing advantage of HBM and DDR5, particularly in high-density server DRAM modules. This led to a 17-19% increase in average selling price (ASP) and a 20.2% rise in revenue to $5.56 billion.

Micron also experienced growth in both volume and price during this period. The company saw a 4-6% increase in each, resulting in a more moderate revenue growth of 8.9%. Micron’s total revenue for the quarter amounted to $3.35 billion. This growth can be attributed to Micron’s focus on DDR5 and HBM products, although its market share in these areas is relatively lower compared to its competitors.

In terms of capacity planning, Samsung managed to bounce back in the first quarter of this year, reaching an 80% utilization rate. This recovery comes after a significant production cutback in the previous quarter. Looking ahead, there is expected to be a notable rise in demand in the second half of 2024, leading to a continuous increase in production capacity up until the fourth quarter. SK hynix is actively expanding its HBM capacity and gradually increasing wafer starts, particularly with the mass production rollout of HBM3E. Micron is also gearing up its wafer starts, aiming to boost its advanced 1beta nm process share for HBM, DDR5, and LPDDR5(X) products. This move is driven by the anticipation of a convergence in capacity due to the increase in advanced process equipment.

In Taiwan, Nanya experienced growth in both volume and price during the fourth quarter, resulting in a 12.1% increase in revenue to $274 million. However, the recovery in consumer DRAM sales dynamics was relatively slower. Winbond, on the other hand, saw proactive shipment performance and benefited from new capacity from its KH fab. This allowed the company to reduce inventory and expand its customer base without raising contract prices. As a result, Winbond experienced a 19.5% revenue increase to approximately $133 million.

PSMC, with its low base shipment, witnessed a significant 110% increase in DRAM revenue to $39 million for the quarter. This growth can be attributed to the gradual rise in spot and contract prices, as well as enhanced client stocking efforts. When considering Foundry services, PSMC’s total revenue experienced an 11.6% increase.

Overall, the DRAM industry is seeing positive growth and manufacturers are strategically positioning themselves to capitalize on this trend. With increased production capacity and advancements in technology, the future looks promising for this sector.

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Background Information

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

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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HBM3E: HBM3E is the latest generation of high-bandwidth memory (HBM), a type of DRAM that is designed for artificial intelligence (AI) applications. HBM3E offers faster data transfer rates, higher density, and lower power consumption than previous HBM versions. HBM3E is developed by SK Hynix, a South Korean chipmaker, and is expected to enter mass production in 2024. HBM3E can achieve a speed of 1.15 TB/s and a capacity of 64 GB per stack. HBM3E is suitable for AI systems that require large amounts of data processing, such as deep learning, machine learning, and computer vision.

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LPDDR5: LPDDR5 is a type of computer memory technology that is used in many modern computers. It stands for Low Power Double Data Rate 5 and is the latest version of the LPDDR memory standard. It is a type of dynamic random access memory (DRAM) that is designed to be more power efficient than its predecessors. It is used in many modern laptops, tablets, and smartphones to provide faster performance and longer battery life. LPDDR5 is also used in some high-end gaming PCs and workstations to provide faster loading times and smoother gaming experiences. It is also used in some servers and data centers to provide faster data processing and storage.