Strong demand, coupled with a supply shortage at the end of 2016, drove PC DRAM prices at least 30 percent higher in the first quarter of 2017, according to DRAMeXchange, a division of TrendForce. Buyers should expect prices to rise by more than 10 percent for both PC and server DRAMs in the second quarter before additional manufacturing capacity comes online in the second half of 2017.
Prices of server and mobile DRAM products also increased in the first quarter of 2017 with mobile DRAM prices rising by nearly 10 percent compared with the fourth quarter 2016. The higher tags for all DRAM products contributed to double-digit growth in the first quarter of 2017, rising by 13.4 percent compared with the previous quarter, according to DRAMeXchange.
“The consolidated DRAM revenue for the first quarter of 2017 rose by 13.4 percent versus the prior quarter,” said Avril Wu, research director of DRAMeXchange, in a statement. “From the supply side, additional DRAM manufacturing capacity will become available in this year’s second half at the earliest mainly to meet the demand related to shipments of new smartphones and PCs during that period.”
“As for this second quarter, the mobile DRAM market has cooled down temporarily, but the server DRAM market is still quite hot,” Wu added. “DRAMeXchange anticipates product prices will again go up significantly in both PC and server DRAM markets, with their respective average increases exceeding 10 percent from the first quarter.”
The top three suppliers – Samsung, SK Hynix and Micron – recorded significant increases in their operating margins in the first quarter, which is expected to continue into the second quarter, according to Wu.
Samsung, with 44.8 percent global market share, held its position as the revenue leader in the DRAM industry in the first quarter. The company posted a 6.8 percent increase in revenue compared with the previous quarter, reaching $6.3 billion, according DRAMeXchange’s latest update.
“Samsung’s goal for this year is to make a smooth transition to the 18-nm process. This will allow Samsung to keep a comfortable lead over its competitors while having a level of production that satisfy the demand of its clients,” according to DRAMeXchange’s analysis. Samsung plans to have 40 percent of its total DRAM bit output based on the 18-nm process technology.
SK Hynix, ranked at number 2, will continue to raise the yield rate and output of its 21-nm technology, and plans to start pilot production on the 18-nm process in the second half of 2017 followed by mass production in the first half of 2018, according to the report. SK Hynix, with 28.7 percent global market share, recorded revenue of $4 billion in the first quarter, posting a growth rate of 21.5 percent.
Ranked at number 3, U.S.-based Micron, which accounted for 21 percent of the DRAM market in the first quarter, grew its revenue by 22.3 percent, reaching nearly $3 billion. Micron’s subsidiary Micro Memory Taiwan reached mass production for its 17-nm process at the start of 2017 and is expected to move most of its DRAM production to the technology by the end of the year, according to DRAMeXchange. Inotera, wholly owned by Micron, will focus on increasing the yield rate of its 20-nm process.
DRAMeXchange also provided updates on leading Taiwanese suppliers – Nanya, Winbond and Powerchip - in the first quarter. Wu reported that Nanya’s revenue increased by 3.6 percent due to price hikes for its specialty DRAM products. The company plans to expand its 20-nm capacity to 30,000 wafers per month towards the end of this year.
Powerchip increased its DRAM revenue by 7.6 percent in the first quarter thanks to rising prices, while Winbond’s revenue fell by 5.5 percent primarily due to a change in product mix.
“A part of the supplier’s wafer capacity was shifted from DRAM to NOR Flash production in the first quarter as the NOR Flash demand showed a sharp upswing,” according to DRAMeXchange. “In addition to expanding the share of the 46-nm process in the total DRAM output, Winbond is expected to formally begin mass production on its 38 nm this third quarter. The supplier’s future revenue result will likely be affected by the ramp-up of its 38-nm production.”