DRAM Q1 Revenue Boosted by 5.1% as Contract Price Increases Counter Seasonal Slump

The latest report from TrendForce reveals that the DRAM industry experienced a 5.1% increase in revenue in the first quarter of 2024, driven by rising contract prices for mainstream products, but the top three suppliers saw a decline in shipments due to off-season effects and high inventory levels.

5.1% increase in revenue in the first quarter of 2024
Strong intention to raise prices with healthy inventory levels
Significant quarterly growth for Micron with aggressive pricing strategy and robust server DRAM shipments

The latest report from TrendForce has revealed some interesting insights into the DRAM industry. In the first quarter of 2024, the industry experienced a 5.1% increase in revenue compared to the previous quarter, reaching a total of $18.35 billion. This growth can be attributed to the rising contract prices for mainstream products, which saw a more significant increase than in the fourth quarter of 2023. As a result, most companies in the industry saw continued revenue growth.

However, it’s worth noting that the top three suppliers actually experienced a decline in shipments during the first quarter. This can be attributed to the industry’s off-season effect, where demand tends to be lower. Additionally, downstream companies had higher inventory levels, which led to a significant reduction in procurement volume.

Despite these challenges, the top three suppliers were still able to benefit from the contract price increases seen in the previous quarter. With healthy inventory levels, there was a strong intention to raise prices. Interestingly, mobile DRAM saw the highest price increase out of all applications, thanks to strong sales of Chinese smartphones. On the other hand, the price increase for consumer DRAM was the lowest among all applications, as manufacturers still needed to clear their inventories.

Looking ahead, TrendForce predicts that even though consumer demand remains weak, the shipment volumes of major suppliers are expected to increase seasonally in the second quarter. However, there is some uncertainty surrounding the damage from an earthquake, which has led to a shift in purchasing attitudes. As a result, some PC OEMs have started to agree on sporadic transaction prices, with increases higher than initially expected. It’s estimated that final DRAM contract prices will rise by 13-18%.

Now let’s take a closer look at the performance of the top three manufacturers. Samsung, despite experiencing only a modest revenue rise of 1.3% to $8.05 billion, managed to retain its leading position in the market. However, its market share did dip by 1.6 percentage points to 43.9%. Samsung’s strategy of increasing average selling prices (ASP) by around 20% successfully offset the decline in shipment volume.

SK hynix, ranked second, saw a slight revenue increase of 2.6% to $5.7 billion. Its market share also declined by 0.7 percentage points to 31.1%. Like Samsung, SK hynix focused on increasing ASP by about 20% to offset the decline in shipment volume.

Micron, on the other hand, had a significant quarterly growth of 17.8% in revenue, reaching $3.95 billion. This performance allowed Micron to secure the third position with a market share increase of 2.3 percentage points to 21.5%. Micron’s aggressive pricing strategy and robust server DRAM shipments, driven by orders from major US clients, contributed to this strong performance. The company saw an ASP increase of approximately 23%, while its shipment volume only dropped by 4-5%, outperforming its top two competitors.

Looking ahead to the second quarter, the top three manufacturers have forecasted their shipment volumes as follows: Samsung expects a growth ranging from low to high single digits, SK hynix anticipates a mid-single-digit increase, and Micron predicts a slight decline.

Moving on to Taiwanese manufacturers, Nanya saw a low single-digit percentage growth in shipment volume in the first quarter. This was driven by restocking momentum due to rising prices and a slower recovery in consumer DRAM sales. Nanya also experienced a high single-digit increase in ASP, resulting in a 10.5% revenue growth to $302 million.

Winbond, on the other hand, did not raise contract prices in the first quarter. However, due to customers’ preemptive stocking, the company’s shipment performance was strong, leading to a revenue increase of 21.6% to $162 million.

Finally, PSMC’s revenue calculation mainly includes its own consumer DRAM products and excludes business from DRAM Foundry. Unfortunately, the first quarter saw a 28.2% decline in DRAM revenue to $28 million for PSMC. This can be attributed to shipping primarily low-priced DRAM products and fewer production and shipping days during the holiday season.

Overall, the DRAM industry is experiencing both challenges and opportunities. While there are uncertainties surrounding demand and market conditions, companies are finding ways to navigate through them and continue to see growth. It will be interesting to see how the industry evolves in the coming months and how these top players adapt to changing market dynamics.

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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

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).