Micron Technology (MU) is moving fast in both the DRAM (dynamic random access memory) and NAND (negative AND) space, but its focus is skewed towards DRAM because the demand is inelastic, which means the demand is unaffected by price changes. PC (personal computer) and mobile vendors have to use a certain amount of DRAM to achieve the desired performance, which makes DRAM a necessity.
Thus, a shortage of PC DRAM and increasing DRAM content in mobile devices caused global DRAM prices to begin rising in June 2016. The higher DRAM prices brought windfall gains to the three DRAM suppliers, Samsung (SSNLF), SK Hynix, and Micron, and put them on the list of top five semiconductor companies by revenue in 2017.
DRAM outlook for 2018
With the emergence of graphics-intensive applications in smartphones and increasing adoption of machine learning and analytics by data centers, the demand for memory is increasing. Advanced Micro Devices’ (AMD) consumer graphics card Vega incorporates HBM2 (high bandwidth memory), and Android flagship smartphones come with eight GB (gigabit) of RAM (random access memory), which is equivalent to a mid-range PC. These trends indicate that DRAM demand will likely continue to increase in 2018.
DRAMeXchange expects global DRAM bit supply to grow 19.6% in 2018 and the bit demand to grow at a higher rate, creating another year of supply shortages. This is because DRAM suppliers have been following a supply discipline where they invest most of their capital in technology transition rather than capacity expansion. Although new DRAM manufacturing facilities are being built, they likely won’t come online until 2019, which would allow the three DRAM suppliers to enjoy another year of strong earnings.
In particular, Samsung could benefit from it focus on higher-value products such as 10-nm (nanometer) DRAM, high-density server DRAM, and LPDDR4x (low power double data rate DRAM).
Next, we’ll look at the NAND market.