According to a report from Taiwan’s TechNews, the NAND Flash industry is gradually recovering in pricing as suppliers continue to reduce production. However, achieving a healthy market balance in terms of supply, demand, and pricing is expected to require more time and effort.

Regarding the memory market situation, TrendForce indicates that the reduction strategies for DRAM and NAND Flash by memory manufacturers are expected to continue into 2024. This is especially evident for the heavily loss-making NAND Flash segment. Despite TrendForce’s projection that visibility into consumer electronics market demand for the first half of 2024 remains uncertain, and with general server capital expenditures still weakened by AI server displacement, the memory market is anticipated to exhibit relatively weak demand.

Yet, TrendForce states, due to the low base in 2023 and certain memory product prices having reached comparatively low levels, DRAM and NAND Flash are forecasted to experience year-over-year growth rates of 13% and 16%, respectively.

On the other hand, even with demand picking up, effectively destocking and restoring supply-demand equilibrium in 2024 hinges on suppliers exercising restraint over production capacity. Once suppliers manage their production capacity appropriately, there’s a possibility for a rebound in the average memory prices.

Nomura Securities notes in their report that since late August 2023, NAND Flash prices have seen double-digit increases. This has largely resulted from the escalating scale of NAND Flash production cuts and the downstream inventory for smartphones and related components being low. Additionally, different brands have been launching new products over the past few months.

Citigroup’s recent update on global memory average selling price outlook reveals significant reductions in production volumes, including major memory manufacturers like Samsung. Memory manufacturers are expected to prevent further decline in memory average prices through substantial production cuts, as further decline could threaten the cash cost level of NAND Flash. Therefore, Samsung’s meaningful reduction in memory product production is expected to contribute to stabilizing the average memory selling price in 2023 and laying the groundwork for a stable recovery in the average memory market selling price throughout 2024.

TrendForce’s investigations find that DRAM suppliers and major PC OEMs are currently participating in the critical period of negotiating with each other over contract prices for 2Q21. Although these negotiations have yet to be finalized, the ASP of mainstream DDR4 1G*8 2666Mbps modules has already increased by nearly 25% QoQ as of now, according to data on ongoing transactions.

This represents a higher price hike than TrendForce’s prior forecast of “nearly 20%”. On the other hand, prices are likewise rising across various DRAM product categories in 2Q21, including DDR3/4 specialty DRAM, mobile DRAM, graphics DRAM, and in particular server DRAM, which is highly related to PC DRAM and is therefore also undergoing a higher price hike than previously expected. TrendForce is therefore revising up its forecast of overall DRAM price hike for 2Q21 from 13-18% QoQ to 18-23% QoQ instead. However, the actual increase in prices of various DRAM product categories will depend on the production capacities allocated to the respective products by DRAM suppliers.

PC DRAM prices are now expected to undergo a 23-28% QoQ growth in 2Q21 due to the increased production of notebook computers

PC DRAM contract prices are rising by a higher margin than previously expected for 2Q21 primarily because major PC OEMs are now aggressively expanding their production targets. Furthermore, as second quarters are generally peak seasons for notebook production, PC ODMs are now estimated to increase their quarterly production of notebook computers by about 7.9% QoQ in 2Q21. Finally, with regards to the COVID-19 pandemic, vaccination rates remain relatively low across the globe, meaning WFH and distance education are likely to persist and create continued demand for notebook computers, thereby further expanding the hike in PC DRAM prices.

DRAM Suppliers will enjoy increased bargaining power in price negotiations as server DRAM prices are expected to increase by 20-25% QoQ in 2Q21

Apart from the issue of short DRAM supply, server DRAM procurement in 2Q21 has benefitted from the positive turn in the view of enterprises toward IT investments as well as the stronger-than-expected demand related to cloud migration. There was already a supply gap in 1Q21, and these developments will further drive up demand in 2Q21. Hence, difficulty has increased for buyers and suppliers in reaching an agreement on price. Suppliers are in a more advantageous position in contract negotiations since the DRAM market is an oligopoly. Therefore, compared to the previous forecast of nearly 20%, TrendForce is now expecting server DRAM contract prices to increase by 20-25% QoQ in 2Q21.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

With Samsung, YMTC, SK Hynix, and Intel leading the charge, NAND Flash suppliers will maintain an aggressive effort to expand their production capacities throughout 2Q21, during which NAND Flash bit output will likely increase by nearly 10% QoQ, according to TrendForce’s latest investigations. On the other hand, orders from PC OEMs and Chinese smartphone brands since 1Q21, as well as recovering procurement activities from clients in the data center segment during 2Q21, will generate upward momentum propelling NAND Flash bit demand. Furthermore, buyers are actively stocking up on finished products, such as SSDs and eMMC, due to persistently limited NAND Flash controller supply. TrendForce therefore expects NAND Flash contract prices to increase by an average of 3-8% QoQ in 2Q21 after experiencing a 5-10% decline QoQ in 1Q21. In particular, as Samsung’s Line S2 fab in Austin has yet to resume full operation after the Texas winter storm, the supply of NAND Flash controllers going forward may be at risk, and Samsung’s ability to manufacture client SSDs will be further constrained as a result. In light of these factors, TrendForce is not ruling out the possibility that NAND Flash contract prices may increase by even more than current forecasts.

Contract prices of both client SSDs and enterprise SSDs are projected to rise due to delayed resumption at Samsung’s Line S2 fab

With regards to client SSDs, the persistent stay-at-home economy generated by the COVID-19 pandemic will likely result in strong demand for notebook computers in 2H21, while PC OEMs have raised their client SSD inventories as they manufacture more notebooks to meet demand. Given the high volumes of client SSD orders from PC OEMs, inventory level of NAND Flash suppliers is therefore likely to remain healthy. However, the shortage of NAND Flash controllers has yet to be resolved. Suspended operations at the Line S2 fab disrupted Samsung’s production of NAND Flash controllers, meaning some client SSD orders will not be fulfilled in 2Q21. Hence, the tight supply of finished products (i.e., client SSDs) will be further exacerbated. As such, client SSD contract prices are projected to increase by 3-8% in 2Q21.

With regards to enterprise SSDs, demand is expected to rebound from rock bottom in 2Q21, primarily because clients in the data center segment will ramp up their procurement activities after undergoing a period of inventory adjustment. In addition, demand for IT equipment from the governmental, healthcare, and financial services sectors will also gradually emerge. Other factors contributing to enterprise SSD demand include bids from Chinese telecom operators and increased IT equipment purchases from small and medium businesses globally. On the other hand, NAND Flash suppliers are no longer under pressure to destock via low prices, since their inventory levels have improved thanks to high demand from notebook manufacturers and smartphone brands. As the overall demand for NAND Flash rises, enterprise SSD contract prices are in turn expected to stabilize and experience a 0-5% growth QoQ in 2Q21.

High demand for Chromebooks will provide upward momentum for eMMC quotes, while contract prices of UFS are projected to undergo the lowest growths among NAND Flash products

eMMC contract prices will likely remain, for the most part, higher than expected despite the cyclical downturn in 1H21. In particular, strong demand from Chromebook manufacturers will provide upward momentum for eMMC quotes. Likewise, under the influence of NAND Flash controller shortage, eMMC buyers such as consumer electronics manufacturers will expand their procurement activities in order to build up their inventories. As a result, the overall eMMC demand will gradually ramp up in 2Q21. Conversely, the supply of eMMC controllers is still in shortage due to the fully loaded capacities across the foundry industry. Also, eMMC products under 32GB exclusively feature 2D NAND or 64L 3D NAND. Because production capacities allocated for these types of NAND Flash memories have been either reassigned to other 3D NAND products or scaled down, the oversupply of eMMC has been alleviated, and the long-term price drop of eMMC has subsequently come to a halt. In the short term, the shortage of controller ICs will result in a shortage of finished eMMC products. eMMC contract prices are therefore projected to increase by 3-8% QoQ in 2Q21.

Demand for UFS, which is primarily used for smartphones, is expected to remain high through 2Q21 because OPPO, Vivo, and Xiaomi have been aggressively procuring UFS since 4Q20, and Huawei spun off its Honor smartphone business unit. Buyers have also been anticipating an upcoming shortage of controller ICs and NAND Flash memory, leading them to build up their UFS inventories and therefore further driving up the overall UFS demand. On the supply side, inventory levels of suppliers have dropped significantly due to smartphone brands’ large-scale procurement activities previously. Although Chinese smartphone brands have yet to ramp up their bit demand, their existing level of demand still remains strong. Furthermore, clients from the data center segment are expected to increase their SSD procurement in 2Q21, and suppliers will maintain an aggressive approach regarding quotes in response. Even so, because smartphones account for the highest bit consumption share among all NAND Flash applications, NAND Flash suppliers are unlikely to significantly adjust their UFS quotes. As such, UFS contract prices are expected to increase by 0-5% QoQ in 2Q21, which is relatively lower compared to other NAND Flash products.

NAND Flash wafer contract prices are projected to increase by 5-10% QoQ as NAND Flash suppliers lower their bit shipment to the wafer market due to its lower profit margins

With regards to the NAND Flash wafer market, TrendForce has yet to observe an obvious improvement in the retail sales of end products such as SSDs, memory cards, and USB flash drives. However, as NAND Flash suppliers have been unable to make their scheduled delivery dates to OEMs due to an insufficient supply of controller ICs, module makers may stand to benefit from this and obtain more orders from OEMs, subsequently driving up the demand for NAND Flash wafers within the next one to two quarters, but the actual procurement of NAND Flash wafers will depend on whether the tight supply situation of controller ICs can be alleviated. On the other hand, inventories of NAND Flash suppliers have now fallen to mostly healthy levels thanks to procurement activities from smartphone brands since 4Q20. Suppliers have accordingly lowered their bit shipments to the NAND Flash wafer market (which yields a relatively lower profit margin compared to other product categories), due to the rising demand from notebook manufacturers and the expected recovery of the data center segment in 2Q21. On the whole, given the bullish market of mainstream products, such as smartphones and notebooks, TrendForce expects NAND Flash wafer contract prices to once again increase by 5-10% QoQ in 2Q21.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

At the moment, the DRAM market has formally entered a new cycle of rising prices, and 2Q21 will see larger QoQ price increases compared with 1Q21, according to TrendForce’s latest investigations. Looking ahead to 2Q21, shipments of various end products are expected to remain fairly strong. At the same time, clients in the data center segment will resume large-scale procurement. Hence, DRAM buyers across different application segments will be under pressure to stockpile. After experiencing QoQ increases of 3-8% for 1Q21, the average contract prices of different kinds of DRAM products are forecasted to rise more significantly by 13-18% QoQ for 2Q21.

PC DRAM contract prices are projected to rise by 13-18% QoQ due to urgent demand from notebook manufacturers driven by bullish notebook market

Notebook computer production on the whole will maintain a fairly healthy momentum in 2Q21. The demand for PC DRAM products therefore continues to grow as PC OEMs have been raising their annual production targets. Since buyers of PC DRAM products are now carrying a relatively low level of inventory (i.e., around 4-5 weeks) and anticipating that DRAM prices will keep rising in the foreseeable future, they have been further ramping up their DRAM procurement activities. With regards to supply, the three dominant DRAM suppliers retain a conservative approach for raising bit output. The production capacity share of PC DRAM could experience a squeeze in the future because of robust demand in other application segments. For instance, some smartphone brands continue to vigorously stock up on memory components. Also, the demand for server DRAM products are expected to warm up rapidly in 2Q21. All in all, contract prices of PC DRAM products will register significant QoQ increases of 13-18% for 2Q21.

Server DRAM prices are projected to rise by nearly 20% QoQ due to cyclical upturn in server shipments

With regards to the demand for server DRAM, the second quarter is traditionally the peak season for server shipments while also being a fairly busy period within the year for the procurement of other kinds of DRAM products. Hence, the situation of different sources of demand competing for DRAM suppliers’ production capacity becomes more evident in this period. TrendForce expects server DRAM buyers to be more aggressive in inventory building during 2Q21 and begin to raise the procurement quantity on a monthly basis. This, in turn, will sustain the uptrend in server DRAM prices. With regards to supply, the server DRAM production capacities of the three dominant suppliers will still not return to the level that existed in the middle of 2020, although these suppliers will slightly increase the share of server DRAM in their overall DRAM production capacities in 2Q21. In addition to the peak-season effect, the COVID-19 pandemic continues to influence server manufacturers as well. Server manufacturers have intentionally extended their component inventories by several more weeks because of the pandemic-induced uncertainties. TrendForce is therefore not discounting the possibility of server DRAM contract prices registering a QoQ increase as large as around 20% for 2Q21.

Mobile DRAM contract prices are projected to remain bullish due to smartphone brands’ expanded procurement activities in advance of market risks

With regards to mobile DRAM demand, smartphone brands will not relax their inventory-building efforts in 2Q21 as the production capacity crunch in the foundry market has made them more vigilant in maintaining a stable component supply. The quarterly total smartphone production volume for 2Q21 is forecasted to exceed 300 million units. Although the three dominant DRAM suppliers have yet to adjust their product mixes for 2Q21, they will probably have to later on because the ASPs of server DRAM and other kinds of DRAM products are rising faster than the ASP of mobile DRAM. Hence, the production capacity share of mobile DRAM could be scaled back so that the production capacity share of server DRAM could grow. Additionally, the behavior of mobile DRAM buyers has been influenced by the cyclical upturn in prices and the anxiety over a tightening of supply in the future. They will continue to procure in large quantities so as to avoid the risks of a supply shortage and larger price hikes. This means that mobile DRAM prices will be on the uptrend as buyers stock up in advance.

Graphics DRAM contract prices are projected to rise by 10-15% QoQ due to high demand for graphics cards from cryptocurrency miners

With regards to demand, the three growth pillars of the graphics DRAM market are graphics cards, game consoles, and cryptocurrencies. At the same time, the mining of various cryptocurrencies has become a lucrative activity. Besides graphics cards that represent the more conventional mining technologies, miners are buying notebooks for this purpose as well. Sensing opportunities, Nvidia has launched CMP (cryptocurrency mining processor) cards and thereby taken up more of DRAM suppliers’ resources. This, in turn, has led to small- and medium-sized OEMs and ODMs experiencing a widening supply gap for graphics DRAM. With regards to supply, the three dominant DRAM suppliers have all reassigned their production capacity for graphics DRAM from GDDR5 to GDDR6, resulting in an increasingly lopsided discrepancy between the two products’ bit supplies, so there is no effective resolution to the ongoing shortage of GDDR5 products. As for GDDR6, demand remains strong as cryptocurrency mining is keeping the demand for graphics cards at a high level, although Nvidia is hogging much of the existing production capacity for graphics DRAM. Looking ahead to 2Q21, the supply situation will still be very strained unless the values of the mainstream cryptocurrencies undergo a drastic change. TrendForce forecasts that contract prices of graphics DRAM will rise by about 10-15% QoQ during this period.

Consumer DRAM contract prices are projected to rise by up to 20% QoQ due to intensifying shortage

With regards to consumer DRAM demand, the demand for TVs, set-top boxes, and networking devices remains strong due to the prevailing stay-at-home economy. Additionally, the build-out of 5G infrastructure and the rapid migration to Wi-Fi 6 contribute to the brisk demand for low-density consumer DRAM products. The supply gap in consumer DRAM market is already significant at this moment and will likely widen in 2Q21. With regards to supply, the overall production capacity for DDR3 products is gradually shrinking. The three dominant suppliers are migrating to the more advanced processes such as the 1Z-nm and 1-alpha nm while reassigning the wafer production capacity of the older processes such as the 20nm and 25nm to CMOS image sensors. Also, Taiwan-based suppliers have allocated some wafer production capacity to products with higher margins (e.g., logic ICs and Flash memory). As a result, the consumer DRAM market is in a rare situation of experiencing a supply shortage and a demand rebound at the same time. There is a strong likelihood that prices of some consumer DRAM chips will register a QoQ increase of almost 20% for 2Q21 contracts, and there is room for further hikes following quarterly contract negotiations.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

As the three dominant DRAM suppliers (Samsung, SK Hynix, and Micron) are currently experiencing a shortage in their production capacities, the corresponding shortage situation in the DRAM market has yet to be resolved, according to TrendForce’s latest investigations. Taking advantage of the fact that the whole DRAM market has entered a period of cyclical upturn in 1Q21, DRAM suppliers have significantly raised quotes for specialty DRAM products. This extraordinary development has led to price hikes that are almost double digits for some specialty DRAM chips. Furthermore, the magnitude of the price hike especially widens for products belonging to the lower part of the density range and the more niche applications. Looking at MoM changes in contract prices of specialty DRAM products for February, DDR2 and DDR3 chips saw the largest price hikes. Prices of DDR4 chips also went up due to the influence of the rising quotes for DDR3 chips. The average contract price of DDR3 4Gb chips, which are still mainstream for specialty applications, jumped 6.8% MoM.

As for DDR3 2Gb chips that are primarily promoted by Taiwan-based suppliers, TrendForce indicates that there is not enough supply even as quotes are being offered. With this situation becoming the norm, the price range (i.e., the difference between the high and low prices) has also expanded dramatically. The average contract price of DDR3 2Gb chips rose by nearly 9% MoM in February. Samsung significantly raised quotes for DDR4 4Gb chips in response to the sharp upswing in prices of DDR3 chips. The low and average prices of DDR4 4Gb chips for specialty applications both climbed around 6% MoM. The average price of DDR4 8Gb chips went up by around 4% MoM as the price trend of this product aligns with the general price trends of mainstream PC DRAM and server DRAM products. However, it should be pointed out that the hikes in contract prices of specialty DRAM chips were mainly the result of the adjustments made to monthly contract deals and thus reflected the market situation of February. By contrast, prices held steady for quarterly lock-in deals with tier-1 clients.

While the three dominant DRAM suppliers have been slowing down their DDR3 manufacturing, Taiwanese suppliers are constantly adjusting their capacity allocation to maximize profits

With demand getting hotter in the specialty DRAM market, DDR3 products are starting to surpass DDR4 products and logic ICs in profit margin. Consequently, DRAM suppliers are also changing their strategies. Looking at South Korean suppliers, Samsung will continue shifting the wafer production capacity of Line 13 to CMOS image sensors over the long term. However, this reassignment has now been scaled down for this year due to the recent surge in specialty DRAM prices. Likewise, SK Hynix will keep the DRAM production capacity of its older fab M10 relatively constant through 2021 after reducing it in 2020. As for Micron, it has raised the yield rates of the 1Z-nm and 1-alpha processes, so the output shares of products based on these more advanced technologies will gradually expand. Since the available fab space in Taiwan is limited, Micron will relocate the 20nm and more mature processes to Fab 6 in the US. In sum, the output of DDR3 products from the three dominant suppliers will continue to shrink, but the pace of the reduction is now slower than originally expected.

Regarding Taiwan-based suppliers, Nanya has shifted some 20nm and 30nm production capacity from DDR4 products back to DDR3 products. Winbond has been focusing on Flash products in the recent years, and its DRAM production capacity will remain fairly limited until the completion of its new fab in Kaohsiung. Nevertheless, Winbond is concentrating its DRAM production efforts on low-density DDR2 and DDR3 products (i.e., 1Gb and 2Gb chips). It actually has the advantage of being able to raise prices as its market share for low-density products is fairly large. As for PSMC, it has been focusing on foundry manufacturing of logic ICs for a while. However, with prices now rising for foundry manufacturing of DDR3 products, PSMC now wants to shift some wafer production capacity back to DRAM. Going forward, the three Taiwan-based suppliers will keep adjusting their capacity allocation strategies in accordance with changes in the profit margins of different products. Nevertheless, even as suppliers are now changing their product mixes to take advantage of the latest market situation, TrendForce projects that specialty DRAM products will be in undersupply at least through 1H21. The magnitudes of price hikes for various types of specialty DRAM products will depend on suppliers’ capacity allocation strategies.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com