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DRAM And NAND Prices Fall
Quote:Good news for consumers: prices for DRAM memory and NAND flash chips will start falling in the fourth quarter "ending nine straight quarters of growth", and that downward trend will continue throughout 2019 according to DRAMeXchange. Their data shows that average DRAM price will drop by 15~20% YoY in 2019 due to several reasons. Smartphones won't see remarkable shipments next year, for example, but there is also uncertainty in server shipments and the shortage of Intel CPUs could affect notebook and PC shipments. DRAM manufacturers expect a high possibility of oversupply, and DRAM expects the annual bit output to increase by nearly 22%, with the 1X/1Y processes going mature and the wafer starts increasing.

The trend will also affect NAND flash chips, which dropped 10% in price in the third quarter and are expected to fall another 10-15% in the fourth quarter. In 2019 the price decline will be around 25-30% due to increased 3D NAND production capacity, specially since enterprise SSD suppliers will fiercely compete next year. DRAMeXchange mentions the impact of China-US trade war, and alert about the gap between the supply and demand, that "may be moderated if the NAND Flash manufacturers postpone their capacity expansion and transition to 96-layer 3D NAND devices".
Good news for those that bought machines with minimal memory and need to expand.
Quote:According to a DigiTimes report citing "industry sources" this week, NAND flash prices are expected to continue to drop in 2019 after already seeing a 50 percent drop this year. Earlier reports said that SSD prices could fall to as low as $0.08 per GB in 2019.

The DigiTimes report noted that the continued drop in prices seems to be primarily due to SSD manufacturers expanding their production capacity to increase profitability, as well as the adoption of 96-layer NAND technology. The technology allows for denser SSDs and, therefore, cheaper storage.

Simon Chen, chairman of Adata Technology, a well-known DRAM and SSD maker from Taiwan, said that flash makers have not only continued to increase production capacities for their flash storage facilities, but that NAND flash products may actually see larger drops in prices next year compared to this year.
Quote:Western Digital told shareholders this week that it plans to delay the deployment of capital equipment and reduce wafer starts to reduce its output by 10-15 percent for CY19. The move follows a report claiming SSD prices could fall by as much as 50 percent in 2019 as manufacturers outside of Western Digital continue to increase their output, switch to denser storage technologies and contend with increasingly hostile trade environments.
Declining SSD prices can be great for consumers. We're finally reaching the point where it might be feasible never to buy another HDD. But these falling prices could have significant effects on companies like Western Digital, which announced yesterday that its revenue and operating income fell to $5 billion and $705 million, respectively in the most recent fiscal quarter, compared to the $5.2 billion in revenue and $905 million in operating income from the previous year.
But the looming trade war isn't the only problem; supply and demand are too. Western Digital CEO Stephen Milligan said on the earnings call:

"This softening demand, in combination with increased flash supply, has led to a market imbalance resulting in a deteriorating near-term flash pricing environment. In response to these conditions, we are making an immediate reduction to wafer starts and delaying deployment of capital equipment. These actions will reduce our wafer output beginning in fiscal Q3 2019. The goal of these actions is to better align our output with the projected global demand for flash. The duration of the planned output reduction will depend upon market conditions and will not impact our ability to meet customer commitments nor will it impede our ability to deliver the most innovative and cost-competitive solutions to the market."
Quote:DRAMeXchange said in September that prices could drop by as much as 5% in 2018. Now the research group has said that prices could fall by as much as 10% in the first quarter of 2019 for PC DRAM, server DRAM, and specialty DRAM. Mobile DRAM isn't expected to be as drastically impacted because prices didn't rise as much the others. For everyone who doesn't make a phone, though, that's welcome.
Quote:According to a new report from Trendforce, memory manufacturers are slowing production to offset the steep decline in price. Contract prices fell 10 percent in Q4 2018 and Samsung, Hynix, and Micron are now on track to spend about $18B on DRAM capacity expansions in 2019. That’s a decrease of 10 percent compared to 2018. Samsung has canceled plans to expand its Pyeongtaek facility. Overall, it looks as though capacity will increase by ~20 percent next year, which is one of the smallest year-on-year manufacturing capacity increases on record. Micron is making even more drastic cuts, with only 15 percent expansion predicted. Don’t feel sorry for the DRAMurai, however — gross margins for Samsung and Hynix remain ~80 percent, while Micron is still above 60 percent. The three firms will attempt to avoid competing dramatically with each other on price by cutting capacity expansion rather than aggressively competing to gain market share at the expense of the other.

DRAMeXchange believes Q1 2019 demand will fall seasonally, but predicts no Q2 recovery yet “due to the looming trade war between China and the U.S.” Contract prices are predicted to fall by a further 15 percent in Q1 2019 and less than 10 percent in Q2 2019, with further declines of 5 percent per quarter “unless the demand is significantly improved.” A resolution of US-China trade tensions could materially change this forecast, however, and the decline in pricing should be good for enthusiasts who have held off on RAM capacity upgrades for PCs due to high pricing over the past 24 months.

It’s not clear how investigations into allegations of price-fixing and market collusion might impact prices going forward. China is conducting an investigation into alleged DRAM price fixing and the head of its anti-monopoly bureau, Wu Zenghou, claimed in November to have “massive evidence” of anticompetitive behavior but did not share specifics past this. The good news is, enthusiasts can look forward to lower RAM prices through at least Q2, regardless of the overall size of the final decline.
Quote:DRAMeXchange has predicted that NAND flash manufacturers will continue to reduce their capital expenditure (capex) by 2 percent in 2019. The reductions are mostly expected to come from South Korean flash manufacturers, but the research group said that U.S. manufacturers will probably reduce their capex as well, despite global capital expenditure already declining by a reported 10 percent between 2017 and 2018.

The reason for these reductions is simple: there continues to be an oversupply of NAND flash memory. DRAMeXchange said this will probably continue to be the case despite manufacturer countermeasures, simply because "demand outlook for notebooks, smartphones, servers, and other end products remains weak." Tech companies probably aren't going to buy a bunch of memory to put in products they're struggling to sell.
Their loss could be our gain. DRAMeXchange said that it "expects a quarterly decline of 20% in 1Q19, higher than [the] previous forecast of 10%, and a further decline of nearly 15% QoQ in 2Q19" and that "for 2H19, the price decline may be slightly moderated considering the coming of peak season, but prices would continue to fall by around 10% each quarter." All told, the group's predicting a 50-percent drop in NAND flash prices over the coming year.

Previous estimates put the drop in memory pricing in 2019 anywhere from 10 percent to 25 percent. (Depending on the type of memory.) Watching the higher of those figures double over the course of a few months indicates that NAND flash manufacturers aren't likely to recover from their oversupply woes any time soon. But hey, at least from a consumer's perspective, who doesn't like it when prices fall?
Quote:1-Terabyte SSDs could become a new mainstream-desktop must-have in 2019, as prices of the drives have fallen by 50 percent year-over-year, according to DigiTimes. A 1 TB SATA SSD in the 2.5-inch form-factor can now be had for as little as $99, while faster NVMe drives in the M.2 form-factor start around $130. At the beginning of 2018, 1 TB SATA SSDs used to start around the $160-mark, and NVMe drives north of $200. The 1 TB category includes 960 GB, 1000 GB, and 1024 GB marketed capacities with varying amounts of overprovisioning set by manufacturers.
Quote:DRAMeXchange, a division of market research firm Trendforce, announced today that it expects contract prices for server DRAM to decrease by 30 percent compared to Q1 2019 prices. DRAMeXchange previously predicted that server DRAM prices would fall over 20 percent in Q1 but is now making its prediction even more dramatic.
DRAMeXchange said that the DRAM price declines may slow down by the end of the year, when DRAM module makers will have started to resolve their oversupply issues. However, by the end of the year we may be looking at PC DRAM prices that are 50 percent lower compared to a year before, and server DRAM prices may see an even more drastic drop.
Quote:To some extent, a cyclical boom-and-bust cycle to the memory business is normal. Even if the market for NAND does continue to slide, we used to see these kinds of business cycles hit the DRAM business on a regular basis. It’s also part of why the DRAM business has consolidated down into a handful of players. If you’re waiting to see what NAND prices do, I don’t think there’d be any harm in waiting another month or two to purchase. If demand is slowly recovering, we should see some evidence of that in Q1 results without prices spiking back up to where they were a year ago. If demand continues to drop, the price of new SSDs is only going to get better.
Quote:DRAMeXchange reported that DRAM prices over the current quarter dropped nearly 30 percent, which it said is the "sharpest decline in a single season since 2011," and that drop is expected to continue until consumer demand finally matches pace with supply.

The research group expected DRAM prices to fall 25 percent this quarter. But it turns out that "most DRAM suppliers are currently holding around a whopping six weeks' worth of inventory." (You know something's up when a research group says "whopping.")

This should result in cheaper memory kits, but DRAMeXchange said that Intel's ongoing CPU shortage has weakened demand for DRAM so much that even those low prices are unlikely to increase sales enough to start counteracting memory makers' oversupply issues.
Samsung had previously said it would slow down memory production to help keep prices stable. Yet here they are in freefall anyway, and those efforts still weren't enough for the company to meet its earnings guidance for the most recent financial quarter.

It's clear that the memory market is changing. DRAMeXchange said that most contracts are now monthly instead of quarterly, prices are dropping faster than anyone expected, and consumer demand for new tech products has fallen for everything from memory to phones.

The upshot? At least DRAM should get cheaper and cheaper for consumers, too, so later this year might be a good time to make a few upgrades to your system. As long as you don't need a new CPU to enable those upgrades, of course. Then you're outta luck.
Quote:Over the past several quarters, SSD prices have been in freefall, and they are expected to continue this trend for at least another few quarters, according to recent reports. Industry watchers reportedly believe that these aggressive price reductions in the SSD market will convince customers to buy higher-capacity or higher-performance SSDs, or both.

This week, analyst DRAMeXchange released research saying device makers are putting higher downward pricing pressure on 512GB/1TB SSDs, as they try to increase the “content-per-box.” This should lead to a higher adoption of SSDs in notebooks, as most of them have been stuck with ~256GB SSDs over the past few years, DRAMeXchange believes.
The sales of high-speed NVMe SSDs are expected to reach 50 percent of the total SSD market by the end of 2019, according to a recent DigiTimes report. Unnamed industry experts told the publication that SSDs' fast price decline will lead many consumers to switch to the much higher-performance NVMe SSDs in 2019.

The price of NVMe SSDs fell 11 percent in Q1 2019, while the price of SATA SSDs fell by only 9 percent, DigiTimes said, citing its anonymous sources. The price difference per GB was 30 percent on average in 2018 but will continue to shrink throughout the year, it added.
Quote:A report from technology market analyst Trendforce places SSD's pricing in sharp decline, with price per GB being projected to hit as low as $0.1 by year's end. Citing oversupply in the NADN flash market and an impending price war to allow manufacturers to sell out accumulating inventory, this is one of those clear cases of a win for consumers - which, after the shenanigans in the DRAM market, is about time. Trendforce further states that the price reductions should render 128 GB SSDs obsolete, as they mostly are by now, with 512 GB capacities becoming the mainstream choice for system integrators and DIY.
Quote:Furthermore, the suppliers are expecting an end to the sharp price declines they saw in the first quarter. The prices for memory modules will continue to fall in the second quarter, but not as fast, offering the companies some breathing room. Furthermore, the prices are expected to rebound in the third quarter as demand increases even more in the high season.

Over the past year or so, DRAM and NAND flash suppliers have found themselves under intense pressure to lower prices and thus decrease their profitability. Some memory makers, such as Samsung, have been reluctant to lower prices, which ultimately led to the company losing both market share and profit.

This has worked in favor of lesser-known or lower-end memory suppliers that have taken advantage of the situation to increase both their market share and profits. DigiTimes reports that, for instance, Adata Technologies was able to reach a six-quarter high profit of NT$152 million (US$4.90 million) in the first quarter this year.

Meanwhile, Team Group saw its first-quarter revenues increase to 3.78% year-over-year to NT$1.69 billion ($54.6 million), which is a nine-year high for the same quarter. Following the compatibility and reliability validations for its full series of T-Force gaming memory modules, Team Group is now also seeking to increase its market share.
Quote:People often say that something is going to get worse before it gets better. According to a May 28 report from DRAMeXchange, the memory market's definitely in the "getting worse" part of that process, because DRAM prices and volume both declined in the first quarter of 2019.
Quote:DRAMeXchange, tech market intelligence firm TrendForce's memeory and storage branch, today added yet another entry to the list of industries expected to be negatively affected by tension between the U.S. and China. The research firm announced that it expects Huawei's blacklisting by the U.S. government to contribute to a DRAM price drop of up to 15% in the third quarter.
But there is some hope for DRAM businesses. DRAMeXchange predicted that DRAM prices "have a chance to see a rebound in 2020 due to prices hitting bottom, limited supply bit growth and other factors." If they can weather the continued decline in memory prices throughout 2019, memory companies might once again know what it's like to see a prices trend upwards instead. We'll enjoy the reduced costs until then.
Quote:In another episode of the "so timely considering market projections for NAND pricing" news, Toshiba and Western Digital have disclosed expected impacts following an unexpected, 13-minute power outage on June 15th, that affected the companies' joint manufacturing facilities in Yokkaichi, Japan.
35% of the world's NAND supply is produced at this Yokkaichi Operation campus (which includes six factories and an R6D center), so this outage and NAND flash loss is likely to impact the global markets. Whether or not this is enough to move the needle from oversupply to undersupply is as of yet unknown, but it is unlikely so - although pricing changes are expected after Q3 and Q4 orders have been settled (whose pricing has already been settled and can't be subject to change). Loss of confidence in the Toshiba and Western Digital manufacturing venture, however, could help offset some of that pricing increase. Obviously, companies have insurance policies that cover them in case of such unexpected events - should they fall squarely out of the control of said companies.
Quote:DRAMeXchange expects the 2D NAND market to feel this decline in wafer availability the most. The popularization of 3D NAND has led many companies to keep less 2D NAND in their inventories, so they don't have large reserves to fall back on in the power outage's wake. The research firm now "expects some impetus for suppliers to raise quotes on 2D NAND products" Q3 2019 as a result.

Things are (kind of) looking better for the 3D NAND market. For Q4, DRAMeXchange expects "contract prices will trend flat or drop slightly according to current assessments." That's largely because low demand from consumers for mainstream 3D NAND products means "the inventory level for these products is high on both the demand and supply ends."

DRAMeXchange also said Toshiba and Western Digital can expect "some loss of confidence from their downstream clients" because "the reliability of their production lines is now under doubt as the base is not resuming normal operation as quickly as can be reasonably expected for a leading-edge semiconductor plant." All because of a 13-minute power outage.
Quote:According to Nikkei, the newly established trade limitations between Japan and South Korea, could end up compromising global memory supply by simply restricting chemicals export. As the report says, Japan has limited it's export of three vital chemicals (like orthophosphoric, hydrobromic and citric acid) used in semiconductor manufacturing, to South Korea.
Quote:That was expected to change when a June 15 power outage stopped production at Fab 2, Fab 3, Fab 4, Fab 5 and Fab 6 for 13 minutes. Any disruption can lead to serious problems for companies like Toshiba; now we're starting to feel the effects of this seemingly brief shutdown. And it's not just because of production delays, either, as DRAMeXchange explained in the Market View report published today.

The increases won't just result from an electric issue at Toshiba's production base; they'll also arrive via political intervention. Japan announced that it "will be controlling South Korea-bound exports of three key materials used in the manufacturing of semiconductors, smartphones, and panels," DRAMeXchange said, which led "module manufacturers in the memory industry downstream to give higher quotes."

But the good news is that DRAMeXchange (and parent company TrendForce) believe these price increases will be resolved in the long term. NAND is expected to be affected more, with the firm saying prices could increase as early as this month, but manufacturers are sitting on two to three months of inventory already. Some could use their existing NAND stock long enough to avoid raising the prices of end products.

DRAM prices will probably be affected less, DRAMeXchange said, because companies are sitting on more than three months of inventory. That and the perception that "overall end demand still seems to be rather weak" for systems, smartphones, etc. led the firm to predict "a continual sliding of contract prices for PC, server and mobile DRAMs at the beginning of 3Q with no signs of reversal as of yet."
Quote:Update, 7/22/19, 6:20 a.m. PT: KBS World Radio, citing "industry sources" and DRAMeXchange data, said that DRAM prices rose by roughly 20% between July 5 and July 20. The report said the spot price of 8Gb DDR4 DRAM averaged $3.74 on the market's close last week. That's roughly 23% higher than it was on July 5--which is the day after Japan started regulating exports to Korea in response to the Toshiba power outage--and 14% higher than it was on July 13.

These price increases weren't attributed to changes in supply and demand, according to KBS World Radio's anonymous sources, so they likely stemmed from some combination of Toshiba's power outage and Japan's export controls. If either leads to actual production delays or supply issues (which DRAMeXchange seemed to think was unlikely) DRAM prices could rise even higher still.
Quote:Memory and flash industry observer DRAMeXchange reported that spot-pricing of 8-gigabit DDR4 DRAM chips, which is used as a benchmark for DRAM pricing as a whole, closed at USD $3.74 at the end of trading on Friday (19/07). It's up 14.6 percent week-over-week, and 23 percent up pricing as on 5th July. An industry observer who spoke with KBS World notes that the recent hikes are not directly infuenced by the trade-spat between Japan and Korea, but rather a power blackout experienced at a Toshiba DRAM manufacturing facility last month. The observer noted that if the trade-spat affects production at Samsung Electronics or SK Hynix, DRAM prices could "skyrocket."
Quote:SK Hynix announced that itwould cut DRAM supply in Q4 as it transitions a portion of that production towards CMOS image sensors. As this follows news of potential supply shortages by the Korean firm, it appears that any supply recovery will be used for the production of devices other than DRAM.

Since this also follows a power outage at Toshiba that initially tightened supply, pushing wholesale memory prices 20% skyward in mere weeks, consumers should expect continued price increases throughout the coming quarter. Perhaps it was never a better time to buy memory than two weeks ago?
Quote:It seems like power outages are the only thing capable of stopping the flash market's decline. DRAMeXchange said in two reports this week that DRAM prices fell nearly 10% in 2Q19 as supply continued to outpace demand, but NAND prices remained flat, thanks at least partly to a June power outage at Toshiba's production facility that reduced supply just enough for prices to stay the same quarter-over-quarter.
The firm said it expects DRAM prices to continue to fall in the third quarter of 2019. Consumer demand isn't expected to rise enough for suppliers to work through existing DRAM inventories, meaning suppliers are likely to see further price drops in the next quarter. Until consumer demand rises across several markets, from smartphones to PCs, flash memory pricing seems unlikely to stop its decline.
But it's not all sunshine and rainbows for NAND suppliers. DRAMeXchange said the production delays caused by Toshiba's power outage might have led to higher prices if companies weren't sitting on stockpiles of NAND. The firm also said that in Q3 of this year "demand will probably be weaker than previous years due to the geo-economical conflicts," presumably referring to the trade war between the U.S. and China.
Quote:DRAMeXchange says DRAM prices will rise in 2020 by about five percent in the first quarter of 2020, as reported by Digitimes.

The reason is that over the course of 2019, many graphics cards and GPU products transitioned to GDDR6 from older GDDR5, which is a trend that will certainly continue into 2020. AMD's Navi-based graphics cards are all already based on GDDR6, and most of Nvidia's Turing cards are, too, with just a few exceptions at the entry and mid-tier GPUs.

The new consoles from Microsoft and Sony are also expected to have an impact on GDDR6 supplies as they're both expected to launch later in the year with the latest GPU memory and storage standards. While they won't launch in Q1, DRAM suppliers are expected to stockpile GDDR6 ICs for when production of the new consoles kicks off.
Quote:According to a report from DigiTimes quoting unnamed sources, chipmakers are saying that NAND and DRAM memory could rise by at much as 40% this year. Prices are already starting to go up. While it’s tough to look at unnamed sources and completely trust them, that upward trend is enough to say that now might be the right time to drop an NVMe drive into your system to get that speed boost.
Quote:On December 31, 2019, Samsung’s Hwaseong plant in South Korea suffered a one-minute long power outage. It took three days to get the DRAM plant back into production. This gave way to a few rumors that the outage would lead to increased DRAM and NAND prices, though it appears that the event won’t have any significant effects on market prices going upwards, according to a report from DRAMeXchange.
DRAMeXchange notes that DRAM prices, despite an upturn, won’t start skyrocketing over the first quarter of 2020, though. For some categories they will remain mostly consistent, with only server DRAM, DDR3 and DDR4 memory seeing an increase in prices between 0 and 5%. Graphics DRAM is expected to see the biggest price increase (between 5 and 10%) over the course of the next three months.
Quote:Adata is looking forward to Coronavirus being contained and not just for the obvious reasons. Chairman Simon Chen is apparently optimistic that prices for DRAM and NAND flash technologies will grow this year once the virus is under control, according to a DigiTimes report Monday.

Chen hopes that growing demand for memory products will resume by June if the latest health scare is contained. That's despite concerns about Coronavirus impacting Q1 demand. According to DigiTimes, Chen said that although he expects the outbreak to hurt Q1 numbers for physical retailers, large growth from online retailers will help push things into the positive. NAND prices have climbed 30-40% since Q4 2019, DigiTimes said.
Quote:The DRAM market exhibits a healthier and more balanced supply/demand relationship compared with the NAND Flash market because of its oligopolistic structure, according to TrendForce's latest investigations. The percentage distribution of DRAM supply bits by application currently shows that PC DRAM accounts for 13%, server DRAM 34%, mobile DRAM 40%, graphics DRAM 5%, and consumer DRAM (or specialty DRAM) 8%. Looking ahead to 1Q21, the DRAM market by then will have gone through an inventory adjustment period of slightly more than two quarters. Memory buyers will also be more willing to stock up because they want to reduce the risk of future price hikes. Therefore, DRAM prices on the whole will be constrained from falling further. The overall ASP of DRAM products is now forecasted to stay generally flat or slightly up for 1Q21.
Quote:As leading makers increase their 3D NAND bit output, prices of flash memory drop due to oversupply. This leads to sinking prices for solid-state drives as other types of NAND-based storage devices. Analysts from TrendForce predict that next quarter prices of client and server SSDs will drop by another 10% to 15% compared to Q4 2020.
Traditionally, PC makers decrease production of computers in the first quarter due to a seasonal downturn. As a result, demand for components, such as memory and SSDs, drops and their prices drop too. But there are two other factors that will drive them down in the first quarter of next year, according to TrendForce.

Firstly, PC makers have plenty of SSDs in their stocks already. Secondly, 3D NAND suppliers are actively sending samples of their 1xx-layer 3D NAND to SSD makers thus energetically supporting launch of new drives.

Demand for computers is high and PC makers have backorders to supply, so their current inventories will likely be consumed to satisfy current demand. Nonetheless, new drives based on 1xx-layer 3D NAND will still be cheaper on per-bit basis than existing SSDs. In any case, TrendForce predicts that client SSD prices will drop by 10% to 15% in Q1 2021.
Many types of 3D NAND based products, including SSDs, flash drives, and memory cards, are in a state of oversupply, according to TrendForce. However, since it is difficult to get components, which are made by foundries, 3D NAND flash suppliers are diverting their production to wafer market.

According to the report, Samsung, the company that has historically focused on actual products and not on selling raw NAND, has begun shipping its 92-layer 3D NAND wafers to module houses. Western Digital, another company that tends to use its 3D NAND internally, has also started sampling of its 112-layer 3D NAND with select customers. Meanwhile, Kioxia continues to supply its 96-layer 3D NAND to clients, whereas SK Hynix is sampling its 128-layer memory.

Aggressive selling of high-density 3D NAND wafers to third-party SSD makers creates bit oversupply on the wafer market, which will cause a 15% quarter-over-quarter price drop in Q1 2021, the analysts predict.
Quote:According to the DigiTimes, DDR3 is expected to gain value by 40-50% for the duration of 2021. This jump in value is caused by a number of events, but overall the situation is caused by more demand than supply.

You might be surprised to hear that DDR3 DRAM is still thriving when DDR4 has been out for years, not to mention the fact that DDR5 already exists. DDR3 maintains decent popularity due to the vast amount of systems that are still around, which are only compatible with the older memory technology. While DDR4 may be the mainstream option for PCs, DDR3 supported systems are still widely used in IoT devices, older servers, and other devices that need to be operational for decades.

In the first quarter of 2021, DDR3 is expected to jump in value by 20%, then as the year goes by, continue to increase in value up to 40-50%. Two factors are at the root of the surge: An unexpected jump in demand for DDR3 in 2021, and memory manufacturers like Samsung and SK Hynix are starting to phase out DDR3 and are producing significantly less DDR3. This last is presumably in preparation for DDR5 production, as older foundries are updated to newer tech and used for more lucrative devices.
Despite its age (DDR3 first launched in 2007), it's safe to say that DDR3 isn't going anywhere. DDR3 production is slowly shifting from top memory brands like SK Hynix and Samsung to smaller companies that can still turn a profit off the older memory architecture. However, even with smaller companies like PSMC ramping up production, it still won't be sufficient to meet the demand for DDR3 during the coming year, so DDR3's value is expected to continually rise as 2021 rolls on.
Quote:NAND Flash demand continues to rise as strong sales of notebook (laptop) computers spur PC OEMs to place additional orders for client SSDs, according to TrendForce's latest investigations. Also, the supply-side inventory for NAND Flash memory has already fallen considerably due to the aggressive stock-up activities of some smartphone brands. With customers in the data center segment expected to ramp up procurement in 2Q21, NAND Flash suppliers have decided to scale back the supply of NAND Flash wafers. Compared with other product categories, wafers have a lower gross margin. As a result of these factors, the decline in contract prices of wafers has been easing over the past two months (i.e., from December of last year to January of this year).
ICs in the upstream supply chain, however, remain in severe shortage. As such, even though NAND Flash suppliers have been putting forth a full effort to fulfill the demand for client SSDs, they will still have to beware of the possibility that actual notebook shipment may fall short of expectations due to an uneven distribution in the supply of raw materials. Furthermore, should the pandemic become gradually alleviated in 2H21, the global notebook demand may begin approaching pre-pandemic levels, in turn leading PC OEMs to revise their business plans accordingly. TrendForce therefore believes that uncertainties will still exist in the NAND Flash market in 2H21.

With regards to the NAND Flash wafer market, the current short supply can be attributed to the fact that demand is mainly focused on certain specific product generations. The decline in NAND Flash wafer prices in 1H21 is thus drastically narrowed, while demand from mostly the server side will also provide some upward momentum for NAND Flash wafer prices afterwards. However, Micron will ramp up its 176L products starting from 3Q21. As these products have been significantly improved in terms of cost, and the main NAND Flash applications will have transitioned to products with higher layer counts by then, the impact on NAND Flash wafer prices in 2H21 remains to be seen.
Quote:Demand for PC, mobile, graphics, and consumer DRAM remains stable throughout 1Q21. As for clients in the server segment, they have now reinitiated a new round of procurement for server DRAM after adjusting their inventories during the two previous quarters (3Q20 and 4Q20). These aforementioned factors, in addition to Micron's power outage at the start of December last year, resulted in a price hike across all DRAM product categories in 1Q21. TrendForce expects DRAM bit supply to remain unchanged and prices to enter an upturn compared with 4Q20. However, as 1Q21 is the first quarter of the upturn in the DRAM market, and demand is yet to emerge out of the off-season, any growth in bit shipment and prices is expected to be modest, with only a slight QoQ increase in global DRAM revenue compared to 4Q20.
With regards to profits, all suppliers experienced a decline in 4Q20 as a result of the 5-10% QoQ decline in DRAM ASP. In particular, Samsung's operating profit margin fell from 41% in 3Q20 to 36% in 4Q20, while SK Hynix likewise showed a decline from 29% in 3Q20 to 26% in 4Q20. For the September-November fiscal quarter (Micron's own fiscal 1Q21), Micron posted a similar decline in DRAM ASP compared to that of its Korean competitors, as well as a decline in operating profit margin from 25% in 3Q20 to 21% in 4Q20. Taken as a whole, DRAM suppliers were unable to make up for the drop in DRAM quotes with cost-optimization measures. Looking ahead to 1Q21, on the other hand, TrendForce expects DRAM quotes to rebound from rock bottom, in turn generating some upward momentum for suppliers' profitability to rebound from rock bottom as well. These events will officially mark the cyclical upturn in DRAM prices. It should also be pointed out that, for instance, leading supplier Samsung still retains at least a 30% profit margin even at the lowest level of quotes, while this figure is closer to 10% for Nanya Tech, which is comparatively smaller in scale as a company. These margins suggest that the DRAM industry will be able to maintain its profitability due to its oligopolistic nature, at least prior to the entrance of emergent suppliers from China.

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