After difficult market conditions in 2019, NAND & DRAM outlook appears favorable in 2020 | Quarterly Market Monitor

NAND strengthens, DRAM nears the bottom, announces Yole Développement (Yole). In addition COVID-19 leads to uncertainty…When will the NAND market shift from oversupply to undersupply, and vice-versa? How will supplier profitability be impacted? Will YMTC’s emergence disrupt the current market conditions? From a DRAM point of view, will the three primary suppliers – Samsung, SK Hynix, and Micron – continue to manage supply and drive industry revenue to even higher levels? Will China’s entrance in the DRAM market disrupt the current market balance? Or will DRAM manufacturing’s enormous technical challenges and the lack of access to DRAM intellectual property prove too difficult to overcome? And what will be the status of NAND/DRAM capital expenditures? … The market research & strategy consulting company, Yole recently unveiled the DRAM and NAND Quarterly Market Monitors for Q1 2020.

Combined DRAM and NAND revenue was higher in Q4 2019 with revenue increasing $0.7 billion to $27.5 billion. Revenue for Q4-19 rose 2.5% compared to Q3 2019 and decreased 23.4% compared to Q4 2018. Demand in Q4-19 was robust due to seasonality and recovering datacenter demand. Supply growth was somewhat constrained due to low production growth and normalizing inventory levels.

The following includes further details on the performance of the NAND and DRAM markets for Q4-19 with a look ahead to the coming quarters. The situation surrounding COVID-19 remains extremely fluid. Yole continues to actively monitor the supply chain and will adjust our outlook in real-time as information becomes available.


The NAND market: the recovery gains momentum.

“NAND market poised to emerge from downturn in 2020,” declare Walt Coon, VP of NAND and Memory Research, part of the Semiconductor & Software division at Yole.

After three consecutive quarters of decline, the NAND market moved higher in Q4 2019 with revenue increasing $1.3 billion to $12.4 billion. Quarterly revenue rose 11.3% sequentially and decreased 4.9% compared to Q4 2018. Average selling prices remained relatively stable during the quarter (up 1.7% QoQ) to $0.125 $/Gb. Meanwhile, shipments rose 9.4% to 99.2 petabytes, a change of +8.5 petabytes compared to Q3-19 (+44.2% QoQ or +30.4 petabytes compared to Q4 2018).

Profitability for the NAND vendors improved in Q4-19, but industry margins remained negative, at -3%, with Samsung the only supplier posting positive margins. “Looking ahead, it is imperative that supplier margins improve to support this capital-intensive business,” asserts Walt Coon from Yole.

Revenue-based market share rankings for Q4 2019 did not change, with Samsung retaining the top spot, Kioxia holding onto second, Western Digital retaining third place, and Micron holding steady in fourth place. Meanwhile, SK hynix retained fifth place and Intel held steady at sixth place. Samsung’s market share grew 0.7% to 36.6% while Kioxia’s market share shrank 1.1% to 18.9% and Western Digital’s market share grew 0.3% to 14.2%. Micron’s market share increased 1.1% to 12.1% while SK hynix’s market share decreased 0.2% to 9.7% and Intel’s market share decreased 0.7% to 7.9%.

Looking ahead to 2020, NAND capital expenditures will be down due to lack of industry profitability and uncertainty surrounding COVID-19 impacts to demand. Capex in 2020 includes early ramp spend from YMTC in China and process migrations from the incumbent suppliers. NAND spend will be heavily weighted to WFE in 2020 as most suppliers have partially-equipped (or empty) cleanroom space that is ready for equipment installs.

The DRAM market: revenue and prices edge downwards but declines are slowing

The DRAM market moved lower in Q4 2019 with revenue falling $0.6 billion to $15.1 billion. Quarterly revenue fell 3.7% compared to Q3 2019 and decreased 34.0% compared to Q4 2018. Prices fell $0.04 during the quarter (or -8.6%) to $0.40 $/Gb. Meanwhile, shipments rose 5.4% to 37.7 exabits, a change of +1.9 exabits compared to Q3-19 (+47.9% or 12.2 exabits compared to Q4 2018).

Market share rankings for Q4 2019 did not change, with Samsung retaining the top spot, SK hynix holding onto the second spot, Micron retaining third place, and Nanya holding onto fourth place. Samsung’s market share shrank 1.1% to 44.1% while SK hynix’s market share grew 1.2% to 28.4% and Micron’s market share grew 0.0% to 22.0%. Given the capital expenditure plans for 2019 and 2020 Yole’s analyst do not expect significant shifts in manufacturing market share this year.

“Improving market conditions in 2020 will result in rising prices and revenue for the DRAM market,” forecasts Mike Howard, VP of DRAM and Memory Research, part of the Semiconductor & Software division at Yole.


Consequences of the covid-19

COVID-19 pandemic makes forecasting extremely difficult, comment Yole’s memory analysts.

The dynamics of the DRAM industry over the last 18 months provide some insight into potential industry performance going forward. Capital expenditure was cut significantly (~30%) in 2019 and, as late as Q3-19, plans existed at suppliers to reduce capital expenditure by as much again in 2020. Given the anticipated significant reduction in global DRAM demand, it is likely that capital expenditure will be down substantially in 2020. Although demand for 2020 is still very much unknown, suppliers will likely lower production plans in anticipation of weak demand. At Yole, analysts believe low investment (resulting in low production growth) will result in a market that is better balanced than the falloff in demand would indicate…

Despite COVID-19, NAND outlook for early 2020 appears to be favorable for the suppliers. Blended NAND pricing will increase in Q1-20 and likely again in Q2 given current pricing momentum, normalized inventory levels, and limited production growth, offsetting lower seasonal demand growth and initial impacts from the virus.

“The second half of 2020 is clearly at significant risk,” comments Walt Coon from Yole. Will COVID-19 cause massive demand destruction (instead of demand pushouts)? Will the YMTC ramp up and growth from incumbent suppliers offset improving seasonal demand aided by the arrival of new gaming consoles? … Many questions are pending. Yole’s memory analysts will proactively monitor the markets and supply chain to provide detailed updates throughout the year with the NAND Quarterly Market Monitor and the DRAM Quarterly Market Monitor.

Yole’s Memory Quarterly Market Monitors, NAND and DRAM will be published every beginning of March (Q1), June (Q2), September (Q3) and December (Q4). The aim of Yole’s team is to give a closer look at the main markets and players.

Yole’s analysts invite you to follow our memory activities on i-Micronews, especially during this complex period due to the impact of Covid-19 and discover the memory reports collection including: Status of the Memory Industry, Emerging Non-Volatile Memory and more.

Stay tuned to i-Micronews to get further info. about our memory activities!

About the Memory team

Walt Coon joins Yole Développement’s memory team as VP of NAND and Memory Research, part of the Semiconductor & Software division.

Based in the US, Walt is leading the day-to-day production of both market updates and Market Monitors, with a focus on the NAND market and semiconductor industries. In addition, he is deeply involved in the business development of these activities.

Walt Coon earned a Master of Business Administration from Boise State University (Idaho, United-States) and a Bachelor of Science in Computer Science from the University of Utah (United-States).

Mike Howard is a member of the memory team at Yole Développement (Yole) as VP of DRAM and Memory Research.

Mike’s mission at Yole is to deliver a comprehensive understanding of the entire memory and semiconductor landscape (with special emphasis on DRAM) via market updates and Market Monitors. Mike is also deeply involved in the business development of all memory activities. Mike is based in the US. Mike has a deep understanding of the DRAM and memory markets with a valuable combination of industry and market research experience.

Mike earned a Master of Business Administration at The Ohio State University (United-States), a Bachelor of Science in Chemical Engineering and a Bachelor of Arts in Finance at the University of Washington (Washington, United-States).

Simone Bertolazzi, PhD is a Technology & Market analyst at Yole Développement (Yole) working with the Semiconductor & Software division. He is member of the Yole’s memory team and he contributes on a day-to-day basis to the analysis of nonvolatile memory technologies, their related materials and fabrication processes.

Simone obtained a PhD in physics in 2015 from École Polytechnique Fédérale de Lausanne (Switzerland), where he developed novel flash memory cells based on heterostructures of two-dimensional materials and high-κ dielectrics.

Simone earned a double M. A. Sc. degree from Polytechnique de Montréal (Canada) and Politecnico di Milano (Italy), graduating cum laude.

Emilie Jolivet is Director of the Semiconductor & Software Division at Yole Développement, member of the Yole Group of Companies, where her specific interests cover package & assembly, semiconductor manufacturing, memory and software & computing fields.

Based on her valuable experience in the semiconductor industry, Emilie manages the expansion of the technical and market expertise of the Semiconductor and Software Team. The team interacts daily with leading companies allowing semiconductor & software analysts to collect a large amount of data and integrate their understanding of the evolution of the market with technology breakthroughs. In addition, Emilie’s mission focusses on the management of business relationships with semiconductor leaders and the development of market research and strategy consulting activities inside the Yole group.

Emilie Jolivet holds a Master’s in Applied Physics specializing in Microelectronics from INSA (Toulouse, France).


Related presentations

Cet article vous a plu ?

Partagez-le sur vos réseaux sociaux