TAIPEI – DRAM suppliers registered revenue for the second quarter reached $24.1 billion, up 26% sequentially, according to TrendForce. Heading into the third quarter, however, mismatched component availability issues began surfacing in the upstream supply chain and bottlenecking assembly of electronics devices.
After DRAM prices made a rebound into an upward trajectory in the first quarter, buyers expanded their DRAM procurement activities in the second quarter as they anticipated a further price hike and insufficient supply going forward, says the research firm.
Not only was demand robust from clients in the notebook segment, which benefitted from ongoing work-from-home and distance-learning applications, but CSPs also sought to gradually replenish their DRAM inventories. Furthermore, demand for products that are relatively niche, including graphics DRAM and consumer DRAM, remained strong. Hence, DRAM suppliers experienced better-than-expected sequential increases in their DRAM shipments in the second quarter. DRAM quotes grew by a greater magnitude compared to the first quarter as well.
Today, in response to relatively high and rising inventories, some OEMs/ODMs (especially notebook manufacturers) have scaled down their DRAM procurement, says TrendForce. As a result, although most DRAM suppliers remain bullish on the market’s future, the growth in demand from certain product segments is likely to slow down, since DRAM buyers still carry ample inventory. In light of suppliers’ insistence on raising quotes, TrendForce expects the overall ASP of DRAM products for the third quarter to undergo a sequential increase of 3 to 8%.
The three dominant suppliers of DRAM products – Samsung, SK Hynix, and Micron – put up similar revenue performances for the second quarter, as they saw an increase in both ASP and shipments, with the latter surpassing the suppliers’ expectations. On the demand side, buyers showed an increased willingness to expand DRAM procurement because they anticipated prices would rise even further. In addition, frequent shortages of various semiconductor components this year drove buyers to stock up on DRAM ahead of time to avoid potential manufacturing bottlenecks due to low DRAM inventory. Hence, each of the three suppliers increased its revenue more than 20% sequentially in the second quarter. Samsung in particular registered the most remarkable growth (30.2%). For the third quarter, these suppliers will not only continue to hike up quotes but also increase their quarterly shipments by a similar magnitude. TrendForce expects their market shares to remain relatively unchanged from the previous quarter.
DRAM suppliers likewise experienced considerable growth in terms of profitability for the second quarter, thanks to the massive increase in DRAM quotes, along with the fact that DRAM products manufactured with advanced process technologies occupied a growing share of the suppliers’ DRAM bit shipment. For instance, while Samsung kicked off mass production with the 1Znm process in the first quarter at a relatively low yield rate, since the technology was still in its infancy at the time, the company was able to considerably ramp production in the second quarter, thereby raising its operating profit margin from 34% in in the first quarter to 46% in the second quarter.
SK Hynix similarly raised its operating profit margin to 38% in the second quarter by improving the yield rate of its advanced process technology. Micron, on the other hand, increased its DRAM quotes by a similar magnitude compared to its Korean competitors in the second quarter and saw a jump in its operating profit margin from 26% in the first quarter to 37% in the second quarter. (Micron counts the March-May period as its fiscal quarter.) Assuming prices and shipments continue their upward trajectory in the third quarter, TrendForce is bullish on DRAM suppliers’ profitability for the quarter as well and expects market leader Samsung to reach 50% in operating profit margin for the first time in nearly three years.
Taiwanese DRAM suppliers posted a massive increase in revenues for the second quarter, owing to persistently high specialty DRAM quotes and high demand from clients. Nanya Tech’s revenue grew about 28% sequentially, and its operating profit margin increased from 17.1% in the first quarter to 31.2% in the second. These growths can primarily be attributed to a 30% increase in the company’s specialty DRAM quotes, and Nanya Tech has said it expects further earnings growth in the third quarter. Winbond, on the other hand, saw strong demand from its clients and raised its DRAM quotes a greater magnitude than its NAND flash quotes. Winbond’s revenue from its DRAM business not only rose 39% sequentially but also accounted for an increasing share of its total revenue, at 46%.
The two Taiwanese suppliers are still facing insufficient production capacities, and their existing fabs do not have the physical space to house additional manufacturing equipment, says TrendForce. Hence, before these suppliers finish constructing new fabs, they must rely on raising quotes to grow their DRAM businesses in the short run. Nanya Tech’s new fab currently under construction will not be able to contribute to the company’s production capacity until construction concludes in 2024. In the short run, Nanya is able to marginally increase its bit output only through migrating to advanced process technologies at the 1A/1Bnm nodes. Similarly, Winbond will not be able to resolve its issue of insufficient production capacity until its fab located in Luzhu, Kaohsiung, kicks off mass production in the second half of 2022.
PSMC’s revenue from sales of PC DRAM products manufactured in-house increased about 7% sequentially in the second quarter. PSMC’s total revenue from both sales of in-house DRAM and its DRAM foundry business increased 19% sequentially. Much like its Taiwanese competitors, PSMC must carefully allocate its limited production capacity between logic IC products and memory products.
