According to the latest survey by DRAMeXchange of TrendForce, the inventory of DRAM suppliers in the first quarter was well depleted, and the inventory level at the end of the quarter had dropped significantly compared with the beginning of the year. Therefore, there was no longer any pressure to reduce prices and demand for sales. The overall DRAM (memory) The average price rose about 0-5% compared to the previous quarter. However, in response to the COVID-19 epidemic, countries have adopted policies of closing cities and countries, which hindered logistics and affected DRAM bit shipments. Therefore, although the average price rose slightly, the overall output value of DRAM declined by 4.6% in the first quarter, reaching US$14.8 billion.
TrendForce pointed out that shipments that were blocked in the first quarter will be deferred to the second quarter. Therefore, under the circumstance that the average price of DRAM increases and the shipment volume increases at the same time, TrendForce predicts that the overall output value of DRAM in the second quarter will increase quarter by quarter. With an increase of more than 20%, the revenue and profitability of the original factory will continue to grow.
The slight increase in the average price of DRAM drives the profitability of the original factory in the first quarter
In the first quarter, shipments were hampered due to the epidemic. Under the circumstance of “price increase and volume contraction”, the revenue of the three major DRAM manufacturers in the first quarter decreased slightly. Samsung fell by about 3%, SK Hynix by about 4%, and Micron. About 11% (this earnings season is from December 2019 to February 2020). In terms of market share, Samsung is about 44.1%, SK Hynix is 29.3%, and Micron is 20.8%. Looking forward to the second quarter, TrendForce expects that the market share will not change much since the production capacity planning is roughly the same.
The profits of the three original manufacturers maintained growth thanks to the increase in the average price of DRAM in the first quarter. Samsung’s operating profit margin in the fourth quarter of last year greatly increased thanks to the one-time recognition, raising the base period. Therefore, although the operating profit margin fell to 32% in the first quarter, the actual profitability continued to improve. SK hynix’s operating profit margin in the first quarter was 26%, a marked improvement from 19% in the previous quarter. Micron’s price increase in the current earnings report season is smaller than that of the Korean factory. In addition, the current cost increase due to the development of the 1Z process has caused a slight decline in the operating profit rate. However, it is expected that the next earnings report period (March to May) will be significantly improved.
The production capacity planning of the three original factories is conservative, and the capital expenditure continues to decline
Looking at the production capacity and technical capabilities of each factory, Samsung continues to shift part of its production capacity (Line13) from DRAM to CMOS image sensors, but the second factory in Pyeongtaek is expected to start DRAM production in the second half of the year, making up for the decline in Line13’s wafer production and increasing 1Z The specific gravity of the process. Overall, considering the impact of the epidemic on the demand side, Samsung has carefully planned its output, and the increase in production capacity in 2020 will not be high; SK Hynix will continue to shift the DRAM production from the M10 factory to image sensors, and increase the output of M14. The production capacity of the Wuxi plant was slightly increased in the second half of the year. However, the increase in overall production capacity for the whole year is not high, mainly due to the increase in the proportion of the 1Y nanometer process; Micron’s wafer production and production capacity have not changed much compared with last year, and this year’s capital expenditure will focus on the mass production and output improvement of the 1Z process. , is currently in the active verification stage of OEM, and will soon be able to enter actual mass production.
On the whole, although the development and introduction of the three major original advanced processes have been delayed, they have been generally smooth, and no major quality abnormalities have occurred. The overall DRAM production capacity has not grown significantly this year, and capital expenditure has continued to decline. The growth of supply bits is mainly due to the transition of advanced processes such as 1Y and 1Z nanometers, not the actual increase in wafer production.
The focus of the Taiwan factory is on the R&D and conversion of advanced manufacturing processes
The double-digit growth in shipments of Nanya Technology in the first quarter led to an increase of nearly 10% in revenue compared with the previous quarter. In addition to the control of R&D expenses, the operating profit rate increased from 11% in the previous quarter to 12.7%. Looking forward to the second quarter, the profitability will continue to improve under the bet of rising average prices; Winbond’s volume and price in the first quarter were roughly flat, so the DRAM revenue did not change much, and the growth strength was more obvious in NAND Flash (flash memory); In the first quarter, Powerchip’s demand for image sensors was still relatively strong, displacing DRAM production capacity, so revenue fell slightly by 3% (revenue calculation mainly included standard DRAM products produced by Powerchip itself, excluding DRAM foundry business).
Despite the divergence in revenue performance, Taiwanese factories are focusing on the next-generation process research and development this year. For example, Nanya Technology will focus on 1A/1B nanometers after announcing that it will not use Micron’s license. Winbond continues to improve the yield and product diversity of the new 25nm process. , Powerchip specializes in the stability and compatibility of 25nm DDR4 products.
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