Micron and Winbond's storage business continues to grow. Research institutions predict that memory prices will increase slightly by 3-8% in the third quarter
On July 13, TrendForce's latest survey showed that the purchase of various electronic components by buyers in the first half of this year has led to a high level of overall DRAM inventory. It is estimated that the increase in DRAM contract prices in the third quarter will increase accordingly. From 18 to 23% in the quarter, it converges to 3 to 8%. Looking forward to the fourth quarter, TrendForce Consulting believes that as the supply of DRAM will continue to rise, it is estimated that the price increase will further converge, or will cause price pressure to rise, 3-8%.
What’s interesting is that on June 8th, Winbond’s June 2021 revenue from the major memory manufacturer, June’s consolidated revenue was NT$8.722 billion, an increase of 6.28% from May and a year-on-year increase of 6.28%. With a huge increase of 111.16%, a single month's consolidated revenue hit a record high. Consolidated revenue for the second quarter of 2021 was NT$25.233 billion, an increase of 18.32% from the first quarter and a substantial increase of 97.87% from the same period in 2020.
Micron also recently released a dazzling financial report and predicts that market demand will continue to be strong and tight supply will continue until 2022. Together with the recent DRAM market prices continue to rise, these have helped Winbond’s operations. In the first half of 2021, Winbond’s consolidated revenue was NT$46.56 billion, a significant increase of 91.59% over the same period in 2020.
Production capacity continues to be squeezed out, PC DRAM prices increase 3~8% quarterly
From the perspective of demand, the effect of the housing economy keeps the demand for notebooks prosperous. Although the problem of long and short materials is still there, manufacturers are still actively maximizing production in the near future. However, the current PC DRAM inventory of brand factories is still 8-10 weeks High water level, so the buyer's procurement strategy will therefore be more cautious. From the perspective of supply, PC DRAM capacity is still being squeezed out due to the continuous increase in server DRAM demand. Therefore, the original factory has a clear attitude towards PC DRAM price increases. It is expected that the difficulty and time of bargaining between supply and demand in the third quarter will increase. The contract price negotiation will not be completed until about the end of July. However, what can be determined is that the supply and demand sides have a certain consensus on the continued price increase, and it is estimated that the contract price for the three quarters will increase by 3 to 8% quarterly.
Purchasing inventory is still high, and the growth rate of Server DRAM in the third quarter has converged to 5~10%
From the perspective of demand, despite the slight increase in server shipments, buyers are not as active in server DRAM stocking as they were in the previous quarter. At present, North American and Chinese cloud service providers have more than 8 weeks of inventory, and procurement efforts will cooperate. Market demand is converging quarter by quarter; some Tier 2 customers have not prepared enough inventory before, so they will continue to pull goods in the third quarter, which is favorable for prices to rise. From the perspective of supply, the three major OEMs are limited by the low server DRAM inventory level, so they hope to maintain profitability through quarterly price increases. It is worth noting that, affected by the downward revision of smartphone DRAM demand, the server industry has obtained better bargaining space. Therefore, TrendForce believes that the negotiation time will be extended if the buyer and the seller do not reach a consensus. It is estimated that the quarterly increase in contract prices in the third quarter will fall within the range of 5-10%.
Mobile DRAM rises by 5~15% quarterly, deviating from market conditions, there is a fear of pricelessness
From the perspective of demand, affected by the continued warming of the epidemic in Southeast Asia, smartphone brand factories that focus on sales and production in this region have lowered their production targets since the second quarter, leading to an increase in mobile DRAM inventory levels of some brand factories. In addition, due to the excessive expansion of brand production targets and the tight supply of foundry capacity, the situation of component length and short material is more obvious, so the brand will slow down the pace of stocking to adjust inventory pressure. From the perspective of supply, the smartphone market has maintained strong demand since the fourth quarter of last year. Therefore, the supply satisfaction rate of the three OEMs in this market has always been better than that of other applications. Profit performance is better than mobile DRAM, prompting the three original manufacturers to deploy production to balance the supply and demand performance of the overall market, and the supply of mobile DRAM will gradually shrink as a result.