Commodity DRAM price rises, DRAM industry value increases by 7 percent in 4Q12

TAIWAN: According to DRAMeXchange, a division of global market research firm TrendForce, as top-tier DRAM makers continued to lower commodity DRAM output in favor of more profitable mobile and server DRAM products and demand surged on China’s MID market, DRAM spot prices increased in the fourth quarter of 2012.

DDR3 1600Mhz 2Gb spot price rose from $0.82 to $1.05 in the fourth quarter, a nearly 30 percent increase. On the contract market, as PC OEMs’ inventory levels were relatively low, DRAM makers gradually raised contract prices as well. Significant price increases are already evident so far in the first quarter of 2013. Benefitting from spot price increases, the value of the DRAM industry increased by nearly 7 percent QoQ in the fourth quarter, and revenue figures were up across the board.

TrendForce’s global DRAM brand manufacturer revenue ranking, Samsung and SK Hynix’s combined market share was 67 percent, up from 64.2 percent in the third quarter. The Korean suppliers continued to increase the production ratio of mobile DRAM products, which currently account for 28 percent of the Korean makers’ total output.

Japanese supplier Elpida came in third place again with 14.4 percent of the market, an 11.3 percent QoQ increase. In addition to increased mobile DRAM production, higher DRAM spot prices contributed to Elpida’s revenue increase. Micron, in fourth, only took 3.6 percent less market share than Elpida.

However, revenue calculations were based on September to November figures due to Micron’s fiscal quarter, when DRAM prices were low; DRAM price did not start picking up until December. Thus, Micron’s revenue for the quarter fell by 9.5 percent QoQ.

As for Taiwanese makers, although Nanya has made the transition to a specialty DRAM manufacturer, the supplier still had commodity DRAM in production in the fourth quarter, and revenue increased by 9.7 percent. After Powerchip’s transition to foundry business, the maker ceased commodity DRAM production in the fourth quarter, which resulted in a 54 percent decrease in DRAM revenue. Winbond remains focused on specialty DRAM sales, with revenue climbing by 0.4 percent.

Samsung, SK Hynix take nearly 70 percent of oligopoly market
Samsung Semiconductors’ market share reached 42 percent in the fourth quarter of 2012, a 1.1 percent QoQ increase. Benefitting from DRAM price increases, Samsung experienced nearly 10 percent revenue growth in the fourth quarter.

Although commodity DRAM price is on an uptrend, Samsung is adhering to its initial plans to reduce output of commodity products in favor of mobile and server DRAM. Furthermore, with the popularity of Samsung’s Galaxy product series, the supplier’s mobile DRAM output ratio may exceed 40 percent this year, leaving commodity DRAM production at less than 20 percent.

With market share rising from 23.3 percent to 25 percent as a result of the DRAM price rebound and revenue increasing by 15 percent QoQ, SK Hynix was the most impressive DRAM maker in the fourth quarter. Although the Korean maker has been increasing mobile DRAM production, commodity DRAM still accounted for nearly half of SK Hynix’s total output in the fourth quarter. Furthermore, as SK Hynix sells significantly on the spot market, the over 30 percent jump in spot market prices contributed to the supplier’s performance.

11 percent revenue growth for Elpida, Micron Group to emerge in latter half of 2013
Also benefitting from additional mobile DRAM production and the commodity DRAM price increase, Japanese supplier Elpida was not far behind SK Hynix last quarter. However, due to the exchange rate, Elpida’s revenue only increased by 11 percent for the fourth quarter.

As for the manufacturer’s product mix, mobile DRAM already accounts for over half of Elpida’s output, while their commodity DRAM ratio is down to 35 percent. As subsidiary Rexchip’s capacity returned to fully loaded status in January and commodity DRAM prices are on the rise, Elpida’s revenue will likely continue to grow in the first quarter of 2013.

Due to fiscal quarter differences, Micron’s fourth quarter market share fell from 12.4 percent to 10.5 percent. As the new Micron group takes off in the second half of 2013; Inotera’s capacity has been in Micron’s hands since January, and discussion is underway regarding capacity at Elpida’s Hiroshima fab and Rexchip.

New plans for Micron’s Singapore tech fab may also be in the works. Once everything is settled, Micron will be toe-to-toe with SK Hynix as one of the three major DRAM players.

Taiwanese DRAM makers out of commodity market, seeking new opps
Looking at Taiwanese suppliers, Nanya’s fourth quarter revenue increased by 10 percent QoQ. Although Nanya has already made the transition to specialty DRAM manufacturer, more than half of their capacity was still dedicated to commodity DRAM in the fourth quarter, making a significant contribution to the supplier’s revenue figures.

Beginning in January, however, Nanya subsidiary Inotera’s capacity will be transferred to Micron, and any of Nanya’s capacity not allocated to specialty DRAM production will be used for foundry business. As a result, the supplier’s DRAM revenue ratio will change drastically in the first quarter of 2013.

As Powerchip has turned to foundry business, the manufacturer gradually reduced commodity DRAM capacity throughout the fourth quarter and stopped new production entirely in December. Accordingly, Powerchip’s DRAM revenue fell by 54 percent QoQ.

As the majority of equipment from the supplier’s P3 fab has been purchased by GlobalFoundries, Powerchip has officially withdrawn from the DRAM market. Like Nanya, Powerchip’s revenue ratios will see a radical change in the first quarter.