Rising Shipments of Chinese Branded Smartphones Led to 17.2% Sequential Increase in Mobile DRAM Revenue for Second Quarter, Says TrendForce

The latest research from DRAMeXchange, a division of TrendForce, finds that the global mobile DRAM revenue grew 17.2% sequentially in the second quarter, benefitting all top three DRAM suppliers. Expanding Chinese branded smartphone shipments, driven by Huawei, OPPO and Vivo, as well as bit supply growth in the mobile DRAM market, attributed to this revenue increase. 

“Going into the third quarter, Apple and Samsung will increase their stock up activities as the former prepares the release of its next iPhone and the latter steps up shipments of its latest flagship Galaxy Note 7,” said Avril Wu, research director of DRAMeXchange. “At the same time, smartphone shipments from Chinese brands are expected to keep growing. The third quarter also heralds the arrival of the traditional peak season. All these factors will cause mobile DRAM demand to surge. According to DRAMeXchange’s analysis, the global average sales price of mobile DRAM will fall just 3% in the third quarter versus the prior quarter. If DRAM suppliers’ sales strategies  for the period were successful, then the profitability of the entire DRAM industry will start to improve.”

Top three suppliers will keep increasing mobile DRAM’s share in total output

In terms of market share by revenue, the top three suppliers – Samsung, SK Hynix and Micron – accounted for 98% of the global mobile DRAM market in the second quarter. The fourth largest supplier Nanya by contrast represented only 1.1% of the market. Also, the percentage of mobile DRAM sales in the total DRAM revenue during the second quarter increased over the first quarter to 43.2%. DRAMeXchange projects that the share of mobile DRAM sales in the total DRAM revenue will become larger in the third quarter as Chinese smartphone brands keep up their shipments.

Suppliers’ revenue performances will depend on the share of LPDDR4 in their shipments and their technology migration efforts

Samsung maintained a lead over its competitors in market share and revenue in the second quarter. The supplier maintains a stable yield rate for its 20nm production, offers a wide range of products and has the largest market share for LPDDR4. “Since 2015, Samsung has progressively allocated more of its production capacity to making mobile DRAM while steadily reduced the share of PC DRAM in its shipments,” said Wu. “Hence, Samsung now greatly surpasses its competitors in terms of overall profitability.”

SK Hynix this year focuses on migrating to the 21nm technology, and this in turn will help widen the presence of LPDDR4 in the mobile DRAM market. While SK Hynix’s production of 21nm mobile DRAM did not reach a substantial volume in the second quarter, DRAMeXchange expects the supplier to ramp up production and increase shipments in the third quarter due to rising market demand. The growth in 21nm mobile DRAM shipments will also significantly increase SK Hynix’s mobile DRAM revenue in the third quarter.

Likewise, Micron is currently at a critical point in its transition to the 20nm manufacturing. “With Apple stocking up components for the next iPhone release, Micron has also stepped up its LPDDR4 production , whether through its wafer fab in Hiroshima or its supplier partner Inotera,” said Wu. “As a result, mobile DRAM will account for a larger share of Micron’s DRAM revenue in the near future and help improve the supplier’s revenue as a whole.”

Most of Nanya’s mobile DRAM products belong to LPDDR2, and the supplier did not expand production in the second quarter when prices of LPDDR2 were on a slide. Consequently, Nanya’s mobile DRAM market share fell 1.1% sequentially in the second quarter. However, Nanya’s cost structure will improve considerably at the start of 2017, when its new fab will be in operation and engage in sample production of 20nm LPDDR3.

Winbond saw a slight sequential decrease of 0.8% in its mobile DRAM market share for the second quarter. However, the supplier’s mobile DRAM revenue grew 1.7% sequentially because of development and sales of customized and application specific products. Winbond is moving towards the 38nm technology and will likely begin mass production on the process next year. The supplier will first use the 38nm technology to make mobile and specialty DRAM products.