DRAMeXchange , a division of TrendForce , holds that next-generation memories and current solutions have their respective pros and cons...
According to investigations by global market research institute, TrendForce, despite the sudden orders in the first quarter...
The revenue growth of the quarter was attributed to the increased bit shipments rather than rising prices, which had been the main cause of the strong climb in the industry’s revenue during the past period of more than two years. In fact, prices practically flattened out in 3Q18 as the market supply has been steadily expanding in the second half of the year. As for the last quarter of 2018, contract prices started to slide in October and will keep falling through 4Q18, thus ending the upswing that had lasted for more than two years.
Moreover, the future price declines will be rather steep because the market has entered oversupply and is experiencing high inventories as well. Against this backdrop, DRAMeXchange anticipates that the slump in contract prices will worsen in 1Q19, since excess inventories are still being carried by memory suppliers, downstream OEMs, and the channel market during that period.
With prices reaching the inflection point and starting to turn downward, divergence has appeared between the large and small memory suppliers with respect to their performances. Suppliers that are smaller in scale are generally the first ones to feel the impact of the price decline and take bigger hits in their revenues. Regarding the results of the top three DRAM suppliers for 3Q18, Samsung as the market leader again posted a new record high. Although there was no significant change in the ASP of its products, Samsung raised its bit shipments by deploying its newly added production capacity. Samsung’s 3Q18 revenue rose by 13.6% QoQ to US$12.73 billion, showing the most impressive results among the top three.
With its ASP having risen by just 1% QoQ, SK Hynix grew its revenue by 6.0% QoQ to US$8.15 billion in 3Q18. Together, the two leading Korean suppliers accounted for 74.6% of the global DRAM market in revenue terms. Samsung’s market share was 45.5%, while SK Hynix’s was 29.1%. Micron, which remained third place in the revenue ranking, also increased its bit shipments. The growth of its ASP was relatively flat, however. Micron’s 3Q18 revenue advanced by 6.8% QoQ to US$5.92 billion. Its global market share was 21.1%, showing no noticeable change from the previous quarter.
The top DRAM suppliers also took their operating margins to new record highs in 3Q18. Although the increases in their ASPs moderated during the period, they were able to raise their operating margins from the previous quarter by optimizing their cost structures via the use of the more advanced manufacturing technologies. Samsung’s increase was the smallest among the top three because of the low yield rate of its 1Y-nm process that was just deployed in the same quarter. Still, Samsung achieved a new record by a nudge of one percentage point from 69% in 2Q18 to 70% in 3Q18. This result also means that Samsung’s gross margin already surpassed the 80% threshold.
SK Hynix raised its operating margin from 63% in 2Q18 to 66% in 3Q18, as it has effectively boosted the yield rate of its 1X-nm process. SK Hynix’s increase was also the largest among the top three. As for Micron, its operating margin came to 62% in 3Q18, up from 60% in 2Q18. The improvement in Micron’s profitability was attributed to the increase in the output share of its 1X-nm process. Looking ahead to 4Q18, the top suppliers are not expected to make new records since their cost reduction efforts will unlikely be enough to offset the effect of plummeting prices.
On the technology front, Samsung’s plan for 2018 is to maintain a higher percentage for the 1X-nm production within its total DRAM output. On the other hand, a part of the expanded production capacity at Samsung’s Line 17 and Line 18 (the second floor of the Pyeongtaek plant) will be allocated to the 1Y-nm production. Samsung aims to have the share of 1X- and 1Y-nm production in its total DRAM output reach 70% by the end of 2018, and then the supplier will raise the output share of its 1Y-nm production in 2019.
SK Hynix began using its 1X-nm process for mass production at the end of 2017 and focused on raising the yield rate of the technology during 1H18. Significant progress occurred in 3Q18. SK Hynix will finish the construction of its second 12-inch wafer fab in Wuxi at the end of 2018 as scheduled. The new fab will begin contributing to the supplier’s DRAM output in 1H19, but it is not expected to quickly ramp up to full capacity because of the economic uncertainties resulting from the US-China trade dispute.
Micron’s subsidiary Micron Memory Taiwan (formerly Rexchip) has all of its production capacity on the 1X-nm process. For its next step, Micron Memory Taiwan will bypass the 1Y-nm production and move directly to the 1Z-nm production. However, the 1Z-nm process is not expected to ready for deployment until 2020. Micron’s other subsidiary Micron Technology Taiwan (formerly Inotera) started the migration from the 20nm to the 1X-nm process in 2Q18 and will also begin developing its 1Y-nm technology toward the end of 2018. DRAMeXchange expects Micron Technology Taiwan to gradually raise the output share of its 1Y-nm production in 2019.
Regarding Taiwan-based suppliers, Nanya posted a drop of 3.7% QoQ in its DRAM revenue for 3Q18. However, Nanya’s operating margin in the same period increased considerably to 51.0%, up from 46.8% in the previous quarter. This was due to cost improvement associated with the deployment of its 20nm technology. The pressure on Nanya’s profitability is mounting, however, as the supplier faces falling prices and will be paying off the depreciation cost related to its capacity expansion.
Powerchip’s DRAM revenue for 3Q18 fell by 13.3% QoQ because the company allocated more its production capacity to make SLC NAND Flash and to provide foundry services for other IC products excluding DRAM. Powerchip currently finds the latter two businesses more profitable than selling DRAM. Winbond’s DRAM revenue for 3Q18 did not change noticeably from the previous quarter. Its bit shipments and ASP also remained stable.
CTIMES loves to interact with the global technology related companies and individuals, you can deliver your products information or share industrial intelligence. Please email us to firstname.lastname@example.org
- 1Andes Launches First DSP Instruction Set for RISC-V Multi-Core Processors to Challenge the HPC Marke
- 2AAEON Announces Cloud Ready Solutions Powered by Microsoft Azure
- 3Promoting AI – Microsoft and Kaohsiung City Government Host iMTduo
- 4NTU College of Medicine Shares Viewpoint Regarding IBM Watson Bottleneck
- 5AUO Showcases Mini LED Backlit LCDs across Diverse Verticals at SID 2019