The global DRAM market is entering the phase of’super cycle (long-term boom)’. DRAM prices are rising sharply as supply cannot keep up with demand, and semiconductor exports are on the rise despite the off-peak season. Semiconductor companies are also making trillions of facility investments in anticipation of improving the mid- to long-term industry conditions. There is also a forecast that the rate of increase in fixed transaction prices in the second quarter will reach 15%.
According to the Korea Customs Service on the 25th, the export of memory semiconductors on the 1st to 20th of this month was $1,073 million, an increase of 14.9% over the same period last month. Exports of DRAM-centered package semiconductors (MCPs) for smartphones increased 16.6%.
In the industry, it is evaluated that it is unusual for exports to show a double-digit increase in February, a traditionally low season for information technology (IT) products.
The DRAM spot market, which reflects the semiconductor industry in real time, has turned to a clear’supplier advantage’. The spot price of DDR4 8G 2400Mbps, a general-purpose PC DRAM product, exceeded 4 dollars in 22 months on the 22nd. As of the 24th, the price was $4.2 each, up 14% from the end of last month and 21.4% from the end of last year.
An industry official said, “The buyers are stockpiling, but the supplier’s willingness to sell is weak,” he said. “A typical’shortage’ situation.”
Recently, demand for semiconductors is increasing in all directions. In the server DRAM market,’big hands’ such as Google and Amazon have recently resumed server investments at once. As Chinese smartphone makers aggressively launch products to expand their market share, demand for DRAM is on the rise, and PC DRAM purchases are also steadily flowing due to the increase in telecommuting.
This market atmosphere is expected to be reflected in the fixed transaction price, which shows the market price of mass transactions between companies. Market research firm Trend Force raised its forecast for the 2Q server DRAM fixed transaction price increase from 8 to 13% to 10 to 15%.
On the 24th, SK Hynix signed a contract to introduce extreme ultraviolet (EUV) exposure equipment worth 4.4 trillion won. The market is taking it as a sign that the semiconductor boom will continue.
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Google and Amazon data center investment resumed… Demand overflows, but supply shortages until the second half
“DRAM demand is expected to grow by about 15% year over year.”
This is the content that Samsung Electronics recently announced on the Korean Exchange. Although we cited the outlook of market research firm IDC, it is unusual for Samsung Electronics to specifically indicate the outlook for the industry in its official document. In the industry, there is an analysis that is an expression of confidence in the DRAM market this year. It is said that smartphone and data center companies are entering the phase of a super cycle (long-term boom) as DRAM purchases are getting stronger.
○Dram spot price soaring 12% per week
The indicator that shows signs of a DRAM supercycle is the spot price of DRAM. Although the proportion of spot transactions accounts for only 10% of all transactions, it acts as a barometer of the industry in that it reflects real-time market conditions.
According to DRAMeXchange, a market research company on the 25th, the price of PC DRAM general purpose products as of the previous day is $4.20 each. The uptrend is so steep that it has risen 12% in the last week and 51% in three months. In the market atmosphere, there are clear signs of a’supplier advantage’. An industry insider explained, “Buyers are moving to accumulate inventory before prices rise further, but sellers are not putting out their products.”
For server DRAM, which is a major item, North American data center companies such as Google, Amazon, and Facebook, which are major purchasers, have resumed server investment. In the first half of last year, data center companies that aggressively began to expand servers due to the surge in data usage due to the spread of the’home economy (home economy)’ began to take their breath in the second half of last year. As inventory was built up, server DRAM purchases were also significantly reduced.
The situation has changed recently. According to foreign media, Facebook plans to build two additional data centers at the Los Lunas campus in New Mexico, USA. Amazon is also reported to have applied for a permit to the government to build additional data centers in France. One server contains 300GB of DRAM, which outperforms a laptop with 8GB of DRAM and a car infotainment system that requires about 2GB.
○ Exports of semiconductors for smartphones surged by 81%
The mobile DRAM situation is also turning positively. Recently, Chinese smartphone makers such as Oppo, Vivo, and Xiaomi are competing to secure inventory. It is known that Huawei’s’share competition’ to occupy an empty spot was fierce, and there was also anxiety about when it would become the subject of the US semiconductor export regulation.
It is proving the semiconductor supercycle as an export indicator. On the 1st to 20th, exports of MCP (semiconductor for smartphones made with DRAM, etc.) to India increased 81.2% compared to the same period last month. In India, there are many mid- to low-end smartphone factories such as Samsung Electronics. Kim Young-gun, a researcher at Mirae Asset Daewoo, explained, “With the end of Chunje (Chinese New Year), orders for memory semiconductors for smartphones and electronic products sold in China will resume.”
On the other hand, DRAM producers such as Samsung Electronics and SK Hynix are known to have no plans to rapidly increase their production (capa) in the short term. This is because it plans to focus on’improving technology’ and’reinforcing cost competitiveness’, such as mass production of products using advanced technology.
Signs of short supply are also detected in the foundry (semiconductor contract manufacturing) market. According to Trend Force, a market research firm, the total sales of global foundry companies in the first quarter of this year are expected to reach $2.29 billion, an increase of 20% from the first quarter of last year ($18.8 billion). Trend Force said, “As the demand for various chipsets continues to increase recently, customers are strengthening their procurement activities.”
○“Supply shortage continues until the second half of this year”
The market outlook is also fueled by optimism. The 2Q server DRAM price forecast (based on Trend Force) has been upgraded from ‘8~13% increase’ to ’10~15% increase’. Winbond, the world’s fifth-largest DRAM maker, said in a performance announcement on the 8th, “Dram supply will be tight until the second half of this year.”
As the semiconductor shortage (supply shortage) became serious, an emergency took place in each country. US President Joe Biden instructed to print semiconductors and “check for 100 days for problems in the supply structure.” There are also observations that lowering dependence on China and focusing on expanding and strengthening supply chains through alliances such as South Korea could benefit Korea. The result may be to focus on increasing production in the United States.
Reporter Hwang Jung-soo/Park Sang-yong [email protected]