Global DRAM revenue merely increases 3.4 percent in 3Q10

TAIWAN: According to DRAMeXchange, the research division of Trendforce, despite15 percent QoQ output growth in 3Q10, DRAM industry recorded $10.8 billion, which is merely 3.4 percent QoQ growth compared to $10.4 billion in 2Q10 given the further 3Q10 contract price decline.

Since 3Q10 DRAM contract price is impacted by DRAM output growth and unsatisfactory PC demand in hot season, DRAM price has indicated the downward trend. In 3Q10, the DDR3 2GB “average” contract price declined 13 percent QoQ to $40 from $46 in 2Q10, while spot DDR3 1Gb eTT chip dropped 18 percent QoQ to $2.27 and DDR2 1Gb eTT chip was down 16 percent QoQ.

DRAM vendors are more conservative toward future capex given the sharp price decline from 3Q10. Samsung may adjust construction plan of its new fab, Fab 16 depending on the future market situation.

Powerchip also adjusted down the CAPEX of 2011 to NT$16 billion, 20 percent lower than NT$20 billion of 2010. Rexchip R2 expansion plans will be postponed as well. We expect DRAM price will drop more than 30 percent QoQ in 4Q10 and the price may bottom out in 1Q11 or 2Q11. DRAM vendors will be more cautious toward the CAPEX in 1H11 during downward trend.

3Q10 worldwide DRAM revenue ranking: Samsung grows its market share to 40 percent
In terms of the own brand revenue, Samsung revenue still dominates other DRAM vendors that 3Q10 revenue grows 21.9 percent while revenue contribution is from mid-20 percent DRAM output growth and slightly rising DRAM average price.

Samsung’s DRAM market share is also sharply up to 40.4 percent in 3Q10 from 34.3 percent in 2Q10. Hynix's market share has slightly declined to 19.8 percent from 21.6 percent given merely 2 percent DRAM output by unsatisfactory yield rate on 46nm process and 9 percent decline for average DRAM price.

Elpida's 3Q10 revenue is down 9.4 percent QoQ in 3Q10 while its market share also declined to 16.1 percent from 18.4 percent since 45nm technology migration is still in early stage and there is less contribution to output growth.

Micron's 3Q10 revenue shrank 10 percent QoQ while its market share is down to 12 percent from 13.8 percent, as well, because the output was constrained during Inotera’ technology migration transition. The 3Q10 DRAM output from Micron decreased 12 percent while the average DRAM ASP slightly declined.

As for Taiwanese vendors, Nanya recorded 5.2 percent revenue decline in 3Q10. Despite the output decline from Inotera, the overall sales bit growth increased 14 percent QoQ benefited from the 50nm migration and enhanced wafer-in productions. However, the DRAM ASP decline 15 percent and market share is down to 4.2 percent from 4.5 percent.

Powerchip outperformed other Taiwanese DRAM vendors with $275 million of 3Q10 revenue, 12.9 percent QoQ growth compared with 2Q10. The good figures are attributed by increased 63nm portion as well as yield improvement.

Although Winbond’s 3Q10 revenue declined 2.7 percent QoQ from revenue in 2Q10, yet we are cautiously optimistic toward Winbond since it has gradually faded out from the commodity DRAM market and less impacted by declining DRAM price. (Fig. 1).Source: DRAMeXchange, Taiwan.
Note: Fig. 1: For Samsung 3Q10 memory revenue (7.49 Trillion KRW), we approximately derived the resulted based on the assumption that DRAM revenue accounts 68 percent in memory sectors and 3Q10 average exchange rate is US$1 against KRW$1,170. We apply this estimation to other vendors by indicating DRAM sales accounts 77 percent for Hynix total revenue, 52 percent for Micron, 35 percent for PSC, 90 percent for ProMOS, 96 percent for Nanya and 63 percent for Winbond under the following exchange rate: US$1 against NT$31.87, US$1 against JPY$85.74.

Market share of own brand DRAM revenue by country
Korean vendors’ market share reached 61.2 percent and remains the leading status in DRAM industry.

American and Japanese DRAM makers’ shares are recorded at 12.2 percent and 16.3 percent, respectively, Market share from Taiwanese DRAM vendors slightly declined to 10.3 percent. (Fig. 2)

Source: DRAMeXchange, Taiwan.