Without a doubt, memory is one of the primary market segments for semiconductor products. However, uncertainties in the NAND and DRAM markets remain, as highlighted by Yole Développement (Yole) in its latest memory monitors, NAND Quarterly Market Monitor and DRAM Quarterly Market Monitor, Q1 2021. The market research and strategy consulting company invites you to discover today the status of the these markets, one year removed from the start of the COVID-19 pandemic.
When the memory markets surpassed $160 billion in revenue in 2018 it would have been easy to believe that a new era had dawned on the notoriously volatile semiconductor segment. The last two years, however, have proven that the only certainty in the memory markets is uncertainty. Revenues collapsed in 2019 by more than 30% as prices fell by nearly 50% for both DRAM and NAND.
As the COVID pandemic gripped the world in 2020 it seemed certain that the memory markets would continue their disastrous declines…yet they did not. Proving once again that they are volatile and fickle markets, both NAND and DRAM markets grew revenue in 2020, 28% and 6% respectively. Combined DRAM and NAND revenue was $122 billion in 2020, with Samsung remaining the undisputed leader in the memory space, with a revenue-based market share of 39% for the full year.
Exiting 2020 both the DRAM and NAND markets showed signs that 2021 could be an even stronger year. Are we entering another memory super cycle similar to 2017? There are several moving pieces and a lingering pandemic that could change the market’s prospects, but the current outlook is promising.
Controller shortages pull in 2021 NAND market recovery
The anticipated 2020 NAND recovery failed to fully materialize as impacts from COVID-19 and worsening trade tensions between the US and China provided a strong headwind to the market. Despite these challenges, both supplier revenue and profitability improved in 2020, indicative of just how far NAND market conditions had deteriorated in 2019, when blended pricing fell by 49%.
“The emergence of the pandemic in early 2020 coincided with a boost in NAND demand from the work- and learn-from-home transitions (with the datacenter and notebook PC segments as the primary beneficiaries)”, explains Walt Coon, VP of NAND and Memory Research, part of the Semiconductor, Memory & Computing division at Yole. And he adds: “It also includes a general pull-in of demand due to concerns about possible pandemic-related supply chain disruptions. These demand pull-ins led to rising NAND average selling prices (ASPs) and strong revenue growth in the first half of 2020 and provided a cushion for the coming second half collapse.”
Although notebook SSD demand remained resilient and new gaming console releases with NAND-based storage provided an uplift in the second half of 2020, smartphone demand was somewhat tepid and datacenter and traditional enterprise OEM demand collapsed as they entered an inventory digestion phase and reduced memory purchases. As a result, NAND ASPs decreased significantly in both Q3- and Q4-2020.
After the weak finish to 2020, NAND market conditions have improved early in the new year. Notebook PC and gaming demand remains robust, driving strength in client SSDs and an improving pricing environment. Datacenter pricing has rebounded due to strong demand, normalized inventory levels, and constrained supply for certain products. Momentum in the mobile space is picking up, with pent-up smartphone demand and the ongoing 5G deployment likely to boost demand throughout the year. Of the major NAND segments, only traditional enterprise OEM demand remains weak, as lingering inventory digestion and pandemic-related economic malaise holds back the recovery.
US/China trade tensions remain a concern, but there is at least some hope that the new US administration will begin serve to thaw relations between the two powers.
Finally, semiconductor shortages of controllers and other NAND sub-components are causing supply chain uncertainty, which puts upwards pressure on ASPs. The recent shutdown of Samsung’s manufacturing facility in Austin, Texas, USA, which manufactures NAND controllers for its SSDs, further amplifies this situation and will likely accelerate the NAND pricing recovery, particularly in the PC SSD and mobile markets, where impacts from the controller shortages are most pronounced.
While many hurdles remain as the market claws back from the impacts of the unprecedented pandemic, the 12-month outlook for NAND has improved dramatically over the past few months with the market poised for a strong recovery in 2021.
DRAM market is shifting into high gear and could soon break revenue records
The last two years have been difficult for the DRAM industry. Prices fell 49% in 2019 and 14% in 2020. Revenues have also declined dramatically off their peaks of 2018. There is, however, a silver lining to the bad news of the last two years. Suppliers have underinvested in new production capability which means supply will be tight for the next 12-18 months. This alone would have resulted in growing revenues in 2021 and 2022. But supply is only one half of the equation – demand also must be considered, and in 2021 the demand picture is looking very bright.
“Demand for DRAM in 2020 was enigmatic, strong when it was expected to be weak (first half of the year) and weak when it was expected to be strong (second half of the year)”, asserts Mike Howard, VP of DRAM and Memory Research, part of the Semiconductor, Memory & Computing division at Yole. “COVID clearly had a major impact on many of the big DRAM segments. Smartphone sales were down yet the surge in work-from-home activity was a strong tailwind for the PC and Datacenter segments.”
2021 is shaping up for strong demand growth across most segments. For some segments (e.g., Smartphone) the growth is a result of the weak sales of 2020. For other segments (e.g., Datacenter) the growth expected in 2021 is a continuation of trends that have been developing over the last five plus years. Regardless of segment, the underinvestment of 2019 and 2020 will limit the amount of production growth in 2021 which will certainly have a significant impact on the overall supply-demand balance. For DRAM, the question is not whether the market will be tight, but instead how tight will the market be? A robust recovery from COVID could push the DRAM market even higher than expectations.
Outlook appears rosy, but the only certainty in the memory markets is uncertainty.
Putting it all together, overall memory market dynamics are trending in a very favorable direction, with momentum growing for a breakout year with rising prices, improved supplier profitability, and record industry revenues for both DRAM and NAND. However, the past year has reinforced the notion that nothing is a given, so we will continue to actively monitor these markets to stay prepared for the changes that will come, with a readiness to expect the unexpected.
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.
Stay tuned to i-Micronews to get further info. about our memory activities!
About the Live Market Briefing
DRAM & NAND Memory markets show building strength – Could we be entering the next supercycle? On April 7 at 5:00 PM CET
The memory markets struggled through a mixed 2020 but appear to have emerged strongly positioned. Could 2021 be the beginning of another memory supercycle?
About the Memory team
As VP of NAND and Memory Research, Walt Coon joins Yole Développement’s memory team, part of the Semiconductor, Memory & Computing 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 has significant experience within the memory & semiconductor industry. He spent 16 years at Micron Technology, managing the team responsible for competitor benchmarking, and industry supply, demand, and cost modeling. His team also supported both corporate strategy and Mergers & Acquisitions analysis. Previously, he spent time in Information Systems, developing engineering applications to support memory process and yield enhancement.
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).
As VP of DRAM and Memory Research, Mike Howard is a member of the Semiconductor, Memory & Computing division, at Yole Développement (Yole).
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. For the decade prior to joining Yole, Mike was the Senior Director of DRAM and Memory Research at IHS. Before IHS, Mike worked at Micron Technology where he had roles in corporate development, marketing, and engineering.
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, Memory at Yole Développement (Yole), working with the Semiconductor, Memory & Computing division. As member of the Yole’s memory team, he contributes on a day-to-day basis to the analysis of nonvolatile memory technologies, their related materials and fabrication processes.
Previously, Simone carried out experimental research in the field of nanoscience and nanotechnology, focusing on emerging semiconducting materials and their opto-electronic device applications. He (co-) authored several papers in high-impact scientific journals and was awarded the prestigious Marie Curie Intra-European Fellowship.
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).
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