Written by Mike Howard and Walt Coon from Yole Développement for SEMICONDUCTOR DIGEST – Heading into 2020 both the DRAM and NAND industries were projected to have turn-around years after suffering through much of 2018 and 2019. However, with the global lockdown triggered by the COVID-19 pandemic the outlook for the industry has changed considerably, and not all the change is for the worse. In this article we explore the impact on memory demand, how suppliers are expected to react to the pandemic, and the likely impact to pricing over the near-to-midterm.
It is easy to imagine how a global pandemic that results in widespread lockdown might negatively impact demand. Perhaps a more illuminating question is if there are any demand segments that have been positively impacted by COVID-19. The short answer is yes. One of the big winners during this crisis has been datacenter, and we thought we would share a few anecdotes that illustrate this.
The first example is Netflix. Over the last eight years Netflix has averaged about four and a half million new customers per quarter. In Q1-20 much of the world went on lockdown and we saw a huge surge in media streaming. The result was that in Q1-20 Netflix had nearly 16 million new users – more than three times their average and 60% more than their prior record – and Q1 only had a few weeks of lockdown for much of North America and Europe. Clearly this has been a boon for streaming media and the datacenters that host streaming media.
Another area where we have seen surging demand is gaming. Steam, the online gaming platform, averaged about 16 million users per day over the six months prior to lockdown. During lockdown it has averaged 23 million users per day, a nearly 50% jump in demand.
Other categories that have been driving datacenter demand include online shopping and video conferencing services such as Zoom and WebEx, which are taking the place of face-to-face interaction as to the world adjusts to “work from home”.
Before COVID we expected the Datacenter to generate about $38 billion in memory revenue in 2020, with revenue weighted towards the second half of the year. Today we anticipate slightly higher revenue but split evenly between the first and second half of the year. Essentially, the first-half surge in demand has changed the half-on-half dynamics for 2020. Cloud Service Providers have been big buyers thus far this year… Full article