As DRAM makers continue to expand market share ,annual bit growth expected to exceed 80% In terms of the company sales breakdown in 1Q07, the performance by Hynix was the most impressive.
April 27th, 2007---According to DRAMeXchange's report, the sales revenue of global DRAM brand makers for 1Q07 experienced an 11% sequential drop (Figure 2). Despite an 18% increase in the global output, the whopping 25% QoQ ASP decline brought forth a slowdown to the DRAM industry production value, which was last seen in 2Q05. The current market demand has apparently been unable to keep up with the increasing 12 inch fab output.
Revenue breakdown by regions (Figure1) shows Korean-based manufacturers enjoying a 46.26% market share, which was slightly higher than the preceding quarter. Taiwan makers, on the other hand, slid from 17.39% to 16.44% during the same period. This is mainly due to the ramp up from their Korean peers, and the fact that Taiwan makers are required to allocate a portion of their increased production to their respective joint venture partners.
Figure-1 Global own-brand DRAM revenues breakdown by region, 1Q07
Region 07Q1 06Q4
Korea 46.26% 46.08%
Germany 13.64% 13.94%
Taiwan 16.44% 17.39%
America 11.50% 11.70%
Japan 12.16% 10.89%
Under the huge 25% DRAM price decline in 1Q07, Hynix was still able to post a 4.6% growth in revenue.
In terms of the company sales breakdown in 1Q07 (Figure 2), the performance by Hynix was the most impressive. Bolstered by its 12 inch fab in China's Wuxi city, the company's bit growth for the first quarter reached 45%. Amid the huge 25% DRAM price decline in 1Q07, Hynix was still able to post a 4.6% growth in revenue. The latest figures by Hynix shows it is posing a threat to Samsung's leading position in the DRAM market, and widening the gap with Qimonda. However, it is expected that Samsung's bit growth rate will reach above 25% in 2Q07, while Hynix will experience a slowdown in growth. Therefore, Samsung still has a chance to widen its gap with Hynix. Meanwhile, the 40% bit growth of Elpida helped the company achieve a quarterly earning similar to that in 4Q06. " The increased capacities from the 12M fab of Powerchip, Elipida's strategic alliance partner, along with its own E300-12 facility in Hiroshima, were two key contributing factors. " said DRAMeXchange DRAM analyst.
As seen above, the market share of Hynix and Elpida is rising sharply, due to their own increased chip production, and production ramp up from their respective joint venture partners. However, for 1H07, excluding Inotera's second fab, the ramp up of other 12 inch fabs has started to slow down. In order to further increase the output, manufacturers will need to migrate to even more advanced manufacturing processes. By 2H07, it is projected that the overall 12¡¨ fab capacity growth of Taiwan manufacturers will hit a new peak growth in 4Q07 and 1H08.
Samsung's leadership is being shaken by Hynix and Elpida (See Figure 3,). Although the current DRAM pricing levels have slipped past their costs, in order to maintain the market share, no one appears willing to stop the capacity expansion of their 12 inch fabs. Resources also continue to be devoted to the development of even more advanced manufacturing processes. Thus, unless a problem is encountered in the technology transition, DRAM makers are expected to continue rolling out more and more chips from their 12 inch fabs. For 2007, the overall bit growth is forecast to surpass 80%, according to the firm.