The economic and trade uncertainties fostered by US-China tension are driving softer demand and this keeps pressure on the average selling prices (ASPs) that DRAMs can command. The first half of 2019 has been soft and the question remains as to when the DRAM market will rebound.
There have been some signs of a rebound in logic circuit shipments (see TSMC achieved massive sales turnaround in June ).
The three main DRAM suppliers – Samsung, SK Hynix, and Micron – generally agree that DRAM bit volume will grow roughly 20 percent per year over the next few years. Micron estimates that the industry capex required to grow DRAM bit volume by 20 percent more than doubled from $8 billion in 2015 to $18 billion in 2018. However, in 2018, capex targeting the DRAM market reached $23.7 billion.
Annual DRAM capex and bit growth. *Annual DRAM capex required to achieve 20 percent bit growth. Source: IC Insights.
IC Insights said it believes that there is a risk of too much DRAM capacity and subsequent pricing weakness will continue for the remainder of 2019. The lower DRAM capex forecast for 2019 should offset overspending in 2018 and help return balance to the DRAM market in 2020.
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