IC Insights has revised its outlook and analysis of the IC industry and presented its new findings in the Mid-Year Update to The McClean Report 2017...
Entering the second half of the year, it is clear the IC industry is on course for a much stronger upturn than was initially forecast in January...
In the case of DRAM, unit shipments are actually forecast to show a decline this year. Moreover, NAND shipments are forecast to increase only 2%, providing a small, added boost to the market growth in that segment.
Prices for DRAM and NAND first began increasing in the second half of 2016, and continued with quarterly increases through the first half of 2017. Figure 1 plots the robust quarterly ASP growth rates, which, from 3Q16 through 2Q17, averaged 16.8% for DRAM and 11.6% for NAND.
With DRAM ASPs surging since the third quarter of 2016, DRAM manufacturers once again stepped up their spending for this segment. However, the majority of this spending is going towards technology advancements and not toward capacity additions.
IC Insights believes that essentially all of the spending for flash memory in 2017 will be used for 3D NAND flash memory process technology as opposed to planar flash memory. A big increase in NAND flash capital spending this year is expected from Samsung as it ramps 3D NAND production at its large, new fab in Pyeongtaek, South Korea.
Historical precedent in the memory market shows that too much spending usually leads to overcapacity and subsequent pricing weakness. Samsung, SK Hynix, Micron, Intel, Toshiba/SanDisk, and XMC/Yangtze River Storage Technology each plan to significantly ramp up 3D NAND flash capacity over the next couple of years (with additional new Chinese producers possibly entering the market).
The likelihood of overshooting 3D NAND flash capacity over the next few years is very high.
IC Insights shows the DRAM quarterly ASP growth rate peaked in 4Q16 but continued a strong upward trend through 2Q17. IC Insights forecasts the DRAM ASP to increase (though marginally) into 3Q17 before edging slightly negative in 4Q17, signaling the end of another cyclical upturn.
Even though DRAM ASP growth is forecast to slow in the second half of the year, the annual DRAM ASP growth rate is still forecast to be 63%, which would be the largest annual rise for DRAM ASPs dating back to 1993 when IC Insights first started tracking this data.
The previous record-high annual growth rate for DRAM ASP was 57% in 1997. For NAND flash, the 2017 ASP is forecast to increase 33%, also a record high gain. (In the year 2000, the predominantly NOR-based flash ASP jumped 52%).
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