Semiconductor M&A Accelerates in 2019
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Strong demand from data center servers and mobile products has driven tight supply and upward price pressure on server and mobile DRAMs throughout 2017. The trend has resulted in record sales for the DRAM market in all four quarters, according to IC Insights.
DRAM revenue is forecast to reach $21.1 billion in the fourth quarter of 2017, up 65 percent compared to $12.8 billion in the fourth quarter of 2016, according to the latest research from IC Insights.
DRAMeXchange, a division of TrendForce, said given the 10 to 15 percent average price hike of mobile DRAMs, Q4 revenue growth will outperform Q3 sales.
Similarly, prices of server DRAMs are expected to rise by as much as 10 percent and shipments of server systems are expected to remain strong in the fourth quarter, worsening the undersupply for server DRAMs.
“The contract prices of server memory modules for the year’s final quarter are projected to increase by six percent to 10 percent on average compared with the third quarter,” said DRAMeXchange analyst Mark Liu, in a statement. “Suppliers therefore can expect to see their revenue and profit margins coming to a new high for the year.”
Data centers needs 10Mn GB to 20Mn GB server DRAM on average, according to DRAMeXchange. Contract prices of server DRAM increased by 40 percent in 2017 due to tight supply.
IC Insights forecasts annual DRAM market growth to reach 74 percent in 2017, marking the fourth time since 1993 that the market has increased more than 50 percent. It’s also the highest growth rate since the 78 percent increase in 1994, and 61 percent more than the 13 percent average DRAM market growth rate from 1993 to 2017, according to IC Insights.
Analysts attribute the market spike in 2017 to constrained supply due to a lack of production capacity expansion, yield challenges with ≤20nm processes, high demand from server and gaming systems, and higher memory content in smartphones and other mobile products.
“There is an increasing need for high-speed but inexpensive data storage in smartphone handsets for multi-tasking, which is boosting the average DRAM content in a smartphone,” said IC Insights.
A few examples cited include the Apple iPhone 8 with 2GB of DRAM and the iPhone X with 3GB of DRAM. Other suppliers pack higher DRAM content like the Samsung Galaxy S8 with 4GB of DRAM (6GB in China), and Huawei’s P10 Plus and HTC’s U11 each with 6GB of DRAM. Both the One Plus 5 model and Razer’s first smartphone contain 8GB of DRAM.
IC Insights expects that DRAM content will continue to rise with new capabilities such as virtual and augmented reality and artificial intelligence in high-end smartphones. At the same time, DRAM growth for smartphones in less developed countries are transitioning from zero to 1 GB of mobile DRAM.
However, analysts agree the DRAM industry will likely experience a drop in growth rate as prices fall when more production capacity comes online over the next year. Both Samsung and SK Hynix have announced new DRAM capacity will come online in 2018, which should put pressure on suppliers to lower ASPs.
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