LYON-VILLEURBANNE, FRANCE – Fourth quarter combined DRAM and NAND revenue was $27.5 billion, down 23.4% year-over-year and up 2.5% sequentially, according to Yole Developpement.

Fourth quarter demand was robust due to seasonality and recovering data center demand, the firm says. Supply growth was somewhat constrained due to low production growth and normalizing inventory levels.

DRAM market share rankings for the fourth quarter did not change, with Samsung retaining the top spot, SK hynix holding onto the second spot, Micron retaining third, and Nanya holding onto fourth place. Given the capital expenditure plans for 2019 and 2020, Yole’s analyst do not expect significant shifts in manufacturing market share this year.

“Improving market conditions in 2020 will result in rising prices and revenue for the DRAM market,” said Mike Howard, VP of DRAM and Memory Research, part of the Semiconductor & Software division at Yole.

“Looking ahead, it is imperative supplier margins improve to support this capital-intensive business,” said Walt Coon, VP of NAND and Memory Research, part of the Semiconductor & Software division at Yole.

The situation surrounding Covid-19 remains fluid. Yole continues to actively monitor the supply chain and will adjust its outlook in real-time as information becomes available.

The Covid-19 pandemic makes forecasting extremely difficult, according to Yole’s memory analysts. The dynamics of the DRAM industry over the last 18 months provide some insight into potential industry performance going forward. Capital expenditure was cut significantly (~30%) in 2019 and, as late as the third quarter of 2019, plans existed at suppliers to reduce capital expenditure by as much again in 2020. Given the anticipated significant reduction in global DRAM demand, it is likely capital expenditure will be down substantially in 2020. Although demand for 2020 is still very much unknown, suppliers will likely lower production plans in anticipation of weak demand. Yole analysts believe low investment will result in a market that is better balanced than the falloff in demand would indicate.

Despite Covid-19, NAND outlook for early 2020 appears to be favorable for the suppliers. Blended NAND pricing will increase in the first quarter and likely again in the second quarter, given current pricing momentum, normalized inventory levels, and limited production growth, offsetting lower seasonal demand growth and initial impacts from the virus.

“The second half of 2020 is clearly at significant risk,” said Coon.

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