DRAM Prices Will Continue to Fall

Despite higher DRAM prices starting in the second quarter of 2014 due in part to a lack of capacity expansions and increased obstacles in transitioning to 2Xnm manufacturing, DRAM prices start to drop at the end of July, according to DRAMeXchange, the memory and storage research division of TrendForce. Prices are expected to continue downward due to weakening demand and increased capacity.

DDR3 1600 MHz 4Gb prices rose as high as $4.60 on July 18, 2014 with average DDR3 4Gb spot prices ending at $4.35 on July 31st, according to DRAMeXchange. This is approximately 18 percent higher than the average DDR3 4Gb contract price for the second half of July, which was approximately $3.69.

However, despite increased demands in the spot market, the industry now faces reduced notebook shipments and gradually weakening demand in China's smartphone market, according to the DRAMeXchange report. “Even with the new iPhone shipments expected to hit record levels during the upcoming periods, the content-per-box for the device's LPDDR3 component is still only 1GB,” according to the report. As a result, the market research firm does not expect any major improvements in the industry's overall bit demand.

Pricing for DDR3 1600 MHz 4Gb devices started to fall from an average of $4.425 at the end of July to $4.199 on August 15. “The price difference between the market's spot and contract prices will gradually shrink following the pricing adjustments implemented by the DRAM suppliers, said Avril Wu, assistant vice president, DRAMeXchange, in a statement. “With the industry's end demand expected to weaken and Samsung preparing to mass produce DRAM products using its 25nm process in the fourth quarter, the chances of DRAM prices undergoing further reductions have become significantly greater.”

Mobile DRAM Ranking Shifts in Q2

The global mobile DRAM market reached $3.3 billion in the second quarter of 2014, accounting for 31 percent of the total DRAM industry, which is a slight increase over 29 percent in the first quarter, according to DRAMeXchange’s latest research. Because DRAM supply is tight worldwide, mobile DRAM prices stabilized in the second quarter. In addition, with rising Chinese smartphone brands combined with 4G network expansion, mobile DRAM shipments grew 12 percent QoQ in the second quarter.

The 2Q report finds Samsung remains the market leader among mobile DRAM manufacturers. Samsung plans to produce mobile DRAM on its latest 23nm technology in the second half of the year, which is expected to lower costs.

SK Hynix reclaimed its second-place ranking with the highest revenue growth rate of 34.8 percent thanks to Apple and Samsung. Hynix is migrating to the 25nm process, while focusing on smartphone brand growth in China, which will help the company maintain its market share around 25-30 percent, according to DRAMeXchange.

Rounding out the top five are Micron, Winbond, and Nanya. Although Micron experienced a slight revenue decrease in the second quarter, the memory maker is expected to see significant growth in the third quarter due to Apple’s next generation iPhone and iWatch, which will likely use LPDDR3, and its volume production ramp of eMCP that may start in the second half of the year, according to Wu.

Winbond’s mobile memory accounted for 13 percent of its total revenue, mainly attributed to strong low and medium-density (512Mb and 1Gb) mobile DRAM shipments. DRAMeXchange reports the company is considering a production capacity increase to 44K wafers per month, with the ratio of mobile memory increasing.

Due to mobile DRAM ASPs and decreased output, NANYA’s mobile DRAM revenue fell by 19 percent QoQ in the second quarter. The manufacturer is currently focusing on KGD product sales, working with top-tier module makers on eMCP products, and is planning volume production of LPDDR3 in the second half of the year, according to DRAMeXchange. “By entering the eMCP and MCP battle, the memory maker hopes to make gains on the feature phone and wearable device markets, which would help push its mobile DRAM revenue ratio up,” according to Wu.

“In the third quarter, with seasonal demand picking up, global smartphone shipments are projected to grow by 13.1 percent QoQ, to approximately 322 million units, and mobile DRAM output is expected to increase with the rise in demand,” stated Wu. “As market supply is slightly tight at the moment, the ASP decline is expected to improve in the third quarter, with a projected three to five percent QoQ decrease.”