According to a survey conducted by DRAMeXchange, except for the relatively slow decline, which is about 10% to 20%, in mobile memory products (discrete mobile DRAM/eMCP), the trend of quoted prices for various products in the second quarter, including standard memorizer, server memorizer, and consumer memorizer have all fell by nearly 30%, the price trend of server memorizer is relatively severe due to its inventory, the decline is about nearly 35%.
From the market perspective, even though the sales bit of the second quarter has increased compared with the previous quarter, the quoted price continued to fall, resulting in a 9.1% decline in total DRAM output in the second quarter compared with the previous quarter.
Looking forward to the third quarter, although the raw material incidents that occurred in Japan and South Korea in early July have led to a rebound in the DRAM (memory) spot market, the spot market was relatively small in size and could not effectively reduce the high inventory in the original factory. Plus, the end demand still remained weak. The contract price in July continued to fall.
In terms of pricing strategy in PC-OEM, a first-line manufacturers, the average price of mainstream 8GB modules in July has slipped to US$25.5, compared with the average price of US$31.5 from the previous quarter, it has dropped nearly 20%. It has also dropped about 10% compared with the price from previous month, which is US$28.5.
DRAMeXchange pointed out that although the events in Japan and South Korea have caused fluctuations in the spot market, the contract price was negotiated based on the fundamentals of supply and demand. When there is no substantial impact on output, no obvious strength can be seen to support prices. In addition, the contract price of mobile storage and server storage, whose shipments accounted for nearly 70%, is still declining in the third quarter.
Comparing the performance of each factory's revenue, Samsung is still firmly in the leading position of the DRAM industry. As the 1Xnm server product problem in the first quarter has gradually faded, Samsung's sales bit in the second quarter has grown significantly, with a quarterly increase slightly higher than 15%. But affected by the decline of more than 20% in quoted price, the quarterly revenue has still fell by 2.7%, reaching 6.78 billion. As for market share, driven by the rebound in shipments in the server sector, it has grew 3%, from 42.7% in the previous quarter to 45.7% in this quarter.
The sales bit of SK Hynix has grown by approximately 13%. However, due to the decline in quoted price, the revenue in second quarter was only US$4.26 billion, which has fell down by 12.6% compared with the previous quarter, and the market share was 28.7%. As for Micron, it still ranked the third. But affected by Sino-US trade issues, Micron's second-quarter shipments were the same as the previous quarter. Its revenue was US$3.04 billion, fell by 19.1% compared with the previous quarter, and the market share has also dropped to 20.5%.
Comparing the profitability of the original factories, affected by the sharp price decline in the second quarter, the operating profit ratio of DRAM suppliers all showed decline.
Among the three major plants, the operating profit rate of Samsung has the smallest decline, from 48% in the previous quarter to 41% in this quarter. However, its gross margin of DRAM is still more than 50%; SK hynix’s high cost is caused by the construction of its plants, making this quarter's cost reduction has little effect, and resulting in a sharp drop in the operating profit ratio from 44% in the first quarter to 28% in this quarter. SK Hynix has the largest decline among the three major plants.
The quoted price of Micron's this quarterly financial report interval (March to May) fell as much as that of Korean manufacturers. Its operating profit ratio fell from 46% in the previous quarter to 35% in this quarter. Looking forward to the third quarter, the profit-making space of original factories will be further compressed if the quoted price continues to drop.
From the technological development perspective, Samsung's investment plan in this year has remained fairly the same. The production size of Pyeongtaek plant will maintain around 60k this year. The Line 17 and the second floor of Pyeongtaek Plant will continue to convert 1Ynm, but since the current inventory level is still high, the conversion speed is not fast.
As for SK hynix, the shipment of 1Xnm accounted for more 40% of shipments in the second quarter, and will accelerate to transfer the old process procedure of 2Ynm and 2Znm to the new 10nm level processes in the second half of the year.
In terms of Micron, Taiwan Micron Memorizer (formerly Ruijing) has all been producing with 1Xnm. Its next target will be skipping 1Ynm stage and directly produce with 1Znm, but the actual contribution will be made in 2020. Taiwan Micron Wafer Technology (formerly Inotera) has produced more than half of the products with 1Xnm, and has began to slowly increase the percentage of 1Ynm this year.
As for Taiwanese manufacturer, Nanya benefited from the significant increase in sales bit, which is more than 30%, in the second quarter. Despite the decline in quoted price, it still experienced an 8.4% rise in revenue compared with the previous quarter. The increase in shipments and a relatively small decrease in quoted price compared with peers caused only a slight drop in interest rate. The gross profit margin and operating profit ratio fell from 40.7% and 26.6% in the first quarter to 34.9% and 22.5% in this quarter respectively.
As for Powerchip, even though it only takes the standard DRAM products produced by Powerchip itself into revenue calculation, and exclude the DRAM OEM business, its revenue declined by 15.3% due to the high inventory level of their client and decline in shipments this season. As for Winbond, DRAM revenues were fairly flat compared to the previous quarter, as it has medium to long terms of bargaining power with customers, making its operating performance relatively stable.