The average selling price (ASP) of DRAMs is forecast to rise by five percent in the third quarter of 2017, compared with the second quarter, due to continued undersupply, according to DRAMeXchange, a division of TrendForce. A supply shortage is expected to continue into 2018 due to a lack of investment in additional production capacity by suppliers in the short term.
“Although the end demand, particularly from the smartphone market, has not been strong this year, the general pace of manufacturing technology migration has been slow and is contributing to the tightening of supply,” said Avril Wu, research director of DRAMeXchange, in a statement. “This situation is anticipated to last to 2018 since suppliers will not take on significant additional production capacity in the short term. Meanwhile, ASPs of various DRAM products will remain high.”
The changing landscape of applications also is having an impact on DRAM production. In the past there were fewer DRAM products because there were only two primary applications – PCs and smartphones, which translated into large swings in pricing due to fluctuations in end market demand, said Wu.
However, today, there are emerging DRAM applications, including graphic processing, cloud computing, automotive electronics and hardware acceleration for machine learning, that are at early stages of their lifecycles, which means a high level of customization, Wu explained.
“For DRAM suppliers, offering customized products introduces complexity to the allocation of their existing production capacity,” she added. “Furthermore, DRAM products for the emerging applications do not experience large price swings because of their lifecycles and smaller supply volumes. On the whole, application-specific DRAM products have helped stabilize the general price trend.”
High demand in the data center market and the year-end busy season for consumer electronics vendors are expected to drive higher demand for DRAMs. A price rally in the spot market last week, along with a price spike in the contract market for DRAM modules, point to higher ASPs for DRAMs of at least five percent in the third quarter, according to DRAMeXchange.
Higher Tags, Short Supply for NOR Flash
DRAMeXchange also forecasts higher prices for NOR flash in the third quarter, rising about 20 percent sequentially, which is attributed to low production capacity and increased demand. The market watcher pegs global production capacity of NOR flash at 88,000 pieces of 12-inch wafers per month, while demand for NOR flash has increased due to rising demand for AMOLED panels for smartphones, IC production for touch with display driver integration (TDDI), and IoT-related components.
Several NOR flash suppliers have plans to reduce production or gradually exit the market, according to Wu, causing an additional challenge for buyers.
“Cypress, for instance, is reducing the portion of NOR flash in its product mix as the company shifts its focus towards automotive and industrial IC markets,” said Wu, in a statement. “Also, a memory maker has recently put up its 8-inch NOR Flash wafer fab for sale.”
“China’s GigaDevice is investing more on 3D-NAND flash and DRAM production following its acquisition of ISSI. As GigaDevice adjusts to the domestic semiconductor policies, the company is expected to supply less NOR Flash products than before,” she added.
The good news for buyers is that some NOR flash suppliers – Winbond, Macronix and Powerchip - are planning to expand production capacity. However, the bulk of the additional capacity won’t be available until the second half of 2018 so undersupply will continue for several quarters.
Currently, only Winbond has announced production increases. The company is expected to add 6,000 wafer starts to its monthly capacity by the end of 2017, increasing to 50,000 pieces per month.
DRAMeXchange reports that “Macronix also wants to gradually raise its NOR flash production capacity after the company has carried out capital reduction, and “Powerchip, which currently lacks in-house technology to produce its own branded NOR flash products, is also expressing interest in entering the market by collaborating with other IC manufacturers.”