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“The DRAM market in the second half of this year will be entering the busy season with tight supply made worse by the temporary suspension of N2 (Fab-2) owned by Micron Technology Taiwan (MTTW),” said Avril Wu, research director of DRAMeXchange. MTTW was formerly known as Inotera before Micron’s acquisition. The company’s fab N2, which is located in Taiwan, suffered a contamination event caused by malfunctioning gas equipment at the start of this July and halted production for two weeks for the cleanup.
The latest update from DRAMeXchange regarding N2’s status reports that the facility has resumed normal operation since mid-July. In terms of damages, just over 20,000 pieces of wafers were ruined by the contamination, and N2’s wafer starts were reduced by about 30,000 pieces during the two-week suspension. In total, MTTW lost around 50,000 pieces of DRAM wafers. As the DRAM market heats up again in the year’s second half due to seasonal demand, this loss will certainly exacerbate the undersupply situation.
MTTW is making its best effort to increase wafer starts in the hope of making up for the lost production period. The chance of worsening supply shortage in the DRAM market in September will depend on MTTW’s ability to offset the wafer loss.
DRAMeXchange’s research also finds that bit demand growth will far exceed bit supply growth in DRAM market for the entire 2017. The annual bit supply growth rate for this year is currently projected at 19.5%, which is much lower than the 25% average growth rate of the previous years. The annual bit demand growth by contrast is estimated to be more than 22%.
Looking ahead, the mobile application will still be the main source of consumption of the global DRAM supply. Even though Chinese smartphone brands have marked down their shipment projections, Apple and Samsung will be releasing the next-generation models of their respective iPhone and Galaxy Note series in this year’s second half. Equipped with more memory, these and other upcoming high-end smartphones will remain the main growth driver of DRAM bit demand.
DRAMeXchange’s price analysis shows that average contract price of PC DRAM modules rose by 4.6% in July compared with June, while the average contract price of server DRAM modules also register a sequential monthly price increase of more than 3%. The price trend for mobile DRAM is starting off flat at the beginning of this third quarter but is likely to move upward later in the fourth quarter. Suppliers especially want to correct the current strange situation of PC DRAM’s ASP being higher than that of mobile DRAM.
On the whole, TrendForce expects very limited capacity expansion for the second half of 2017, so DRAM suppliers will adjust their product mixes based on product margins. The price forecast for this year’s second half indicates small and gradual increases as the general trend.
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