Monday, November 19, 2012

Contract price downtrend for 4Q mobile DRAM eases as smartphone shipments rise

TAIWAN: According to DRAMeXchange, a research division of TrendForce, 4Q12 mobile DRAM contract prices have been declining at a slower rate compared to the previous quarter, with LPDDR 2 prices dropping at somewhere within the 5~10 percent range.

Regarding MCP (Multi-Chip Package), as the 4+2 and 4+4 products shipments begin to tighten during the fourth quarter, the price drop levels have experienced a noticeable plunge, shrinking from 10 percent during 3Q12 to around 5 percent this quarter.

For eMCP (eMMC + Multi-Chip Package), with the exception of Samsung and SK Hynix, no other companies have been capable of providing steady supplies of eMCP in large quantities. Samsung's current strategy is to lower prices by an extent exceeding that for single chip DRAM products, thereby increasing the number of potential buyers for eMCP.

From the market perspective, given the arrival of the traditional peak season, shipment volumes for smartphone products such as Apple's iPhone 5, Samsung's Galaxy S3 and Note 2, and Google's Nexus 4 are all expected to surge. With the added benefit of rising demand momentum, 4Q12 global smartphone shipments are estimated to arrive at around 196 M, which is approximately 9.3 percent higher than the numbers in 3Q12.

The price downtrend experienced by mobile DRAM, in addition, is also expected to ease during the fourth quarter. Given the 3Q12 shortage experienced by core chip makers like MediaTek, along with the fact that the shortage issue wasn't resolved until October, smartphone makers have been rushing for the other components as soon as the core chips were received, which in turn caused mobile DRAM supply to tighten and limited the level of price drops for low density mobile DRAM.

For MCP, given that the gradually diminishing LPDDR1 production is leading to a shortage in supply, contract prices have remain largely unchanged from the amount during the previous year.  

With 1Q13 set to arrive, and with demand likely to soften during the peak-less season, first tiered DRAM makers are expected to actively hasten the transition from the production of PC DRAM to that of server and mobile DRAM. In terms of the technology involved, the 2xnm processes will be prioritized for mobile DRAM, due in large part to their relatively better time and power efficiency.

Other than the fact that the mobile DRAM used for smartphones and tablet PCs currently account for over 80 percent of the market, following the introduction of Intel's Haswell, which supports LPDDR3, mobile DRAM will be able to further establish its position within the PC territory.
According to TrendForce's research, mobile DRAM's global production proportion will climb from 22 percent in 2012 to around 30 percent in 2013. Even though a larger portion of the growth will likely take place during 1Q13, with the economic expansion and manufacturing process migrations continuing, DRAM makers with the necessary technological capabilities will still be able to enjoy profitable gains within the mobile DRAM industry.

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