According to the DRAMeXchange research division of TrendForce, the DRAM inventory finally returned to a relatively norma...
The following analysis shows TrendForce’s investigations of key component and other downstream technology industries, under the impact of the COVID-19 outbreak...
In the PC DRAM segment, although negotiations over 1Q20 contract prices are currently underway, TrendForce predicts a high probability that prices of memory products shipped to PC OEMs will trend either flat or slightly upward. To avoid the potential increase of the U.S. tariffs on Chinese imports, PC OEMs rushed the shipments of notebook PCs to the U.S. market in 4Q19. Subsequently, notebook PC shipments during 1Q20 will be weaker compared to traditional seasonality.
On the other hand, PC OEMs are under pressure to raise their memory inventories because DRAM suppliers are curbing their bit output. The YoY growth of the total DRAM bit output in 2020 is still projected to be less than 13%. Hence, PC OEMs are actively preparing for a supply-driven price hike in the near future. The power outage at Samsung’s Hwaseong base has only dialed up the sense of urgency. With the aim of building up a safety stock of DRAM modules in mind, PC OEMs in 1Q20 seem to be willing to accept prices that are the same level or marginally higher compared with the previous quarter. They may concede on price if DRAM suppliers are cooperative in raising product quantity.
In the mobile DRAM segment, although consumer interest in 5G smartphones is growing in 1Q20, the supply of 5G chipsets is still quite limited. Also, smartphone makers usually dial back their demand for key components during the traditional off season. Hence, any 5G-related memory demand is not expected to be significant in the beginning of 2020. TrendForce previously forecasted a 0-5% decrease QoQ in contract prices of mobile discrete products and eMCP products for 1Q20.
However, server DRAM and Graphics DRAM products are now expected to lead the general price rally, as their demand has been warming up since mid-December. As well, the recent tightening of supply in the NAND Flash market is helping to prop up prices of eMCP products. The positive sentiment in these two segments has spilled over into the mobile DRAM market. The latest forecast has therefore corrected mobile DRAM price trends from “slightly downward” to “mostly holding steady” for the period.
Samsung produces most of its specialty DRAM chips on the 20/25nm processes at its Hwaseong-based fab Line 13, which was affected by the power outage. Moreover, contracts prices of specialty DRAM chips have been the first to feel the effects of the nearly month-long price upswing in the spot market.
As a result, contract prices of specialty DRAM chips could rebound sooner than initially anticipated. For this first quarter, major customers (or tier-1 clients) that procure specialty DRAM chips through quarterly lock-in deals could see prices staying on the same level as in 4Q19. However, the average supply fulfillment rate of DRAM suppliers for quarterly deals related to specialty memory products is estimated to be under 60% for 1Q20. Most customers in the specialty DRAM segment had not proactively stocked up at the end of last year, so they entered 2020 with rather low inventories.
Therefore, contract prices of most specialty DRAM chips will probably begin to register monthly rises starting from the first quarter. Moreover, double-booking from buyers could cause a further drop in the supply fulfillment rate. In light of these factors, contract prices for DDR3 and DDR4 memory products are projected to register a 0-5% QoQ increase in 1Q20.
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