NAND & DRAM QUARTERLY MARKET MONITOR - Q1 2020


After difficult market conditions in 2019, NAND & DRAM outlook appears favorable in 2020

MARKET DYNAMICS:

  • NAND market conditions and profitability for the vendors improved in Q4 2019.

  • NAND industry margins remained negative during this period.

  • NAND capex is likely down slightly in 2020 and includes early ramp spend from YMTC.

  • DRAM revenue was down slightly in Q4-19 but market dynamics improved.

  • DRAM Capex was down in 2019 and will decline again in 2020, helping the market recover in 2020 and beyond.

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MARKET OUTLOOK
NAND strengthens, DRAM nears the bottom, announces Yole Développement (Yole). In addition COVID-19 leads to uncertainty…

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…

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, VP of NAND and Memory Research, part of the Semiconductor & Software division at Yole.

DRAM 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... 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.

WHAT’S NEXT?
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? … Lot of questions are pending and Yole’s memory analysts investigate to deliver detailed updates all year long within 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