TrendForce, a market intelligence firm, recently reported global revenue of dynamic random access memory (DRAM) rose by 2 percent sequentially in the second quarter. However, the organization also revealed an industry-wide decline in pricing undercut the segment’s growth.
The analysis organization expects the sector’s downward trend to continue into the fourth quarter.
Why DRAM Revenue Spiked in Q3
TrendForce states worldwide DRAM revenue hit $17.4 billion last period because of a surge in purchases by Chinese conglomerate Huawei. The company noted the telecommunications giant stockpiled various electronic components in Q3 ahead of a change in U.S. export controls.
Though its long-term prospects are unknown, Huawei procured enough semiconductors to support its telecom business through next year. Because the corporation spent billions of dollars to fortify its inventory, its capital expenditure bolstered the entire DRAM sector.
The conglomerate’s financial outlay proved hugely beneficial for its long-time memory supplier Micron Technology. In Q3, the Boise, Idaho-based chipmaker’s generated $4.371 billion in DRAM income, an increase of 21.9 percent, quarter-over-quarter. The firm surging revenue grew its share of the global market to 25 percent, up 4 percent from the June period.
In addition, Winbond, a Taiwanese manufacturer, also had a spike in its Q3 income because of Huawei. It recorded $1.56 million in flash memory revenue last period, a sequential improvement of 11.3 percent.
Soft Server DRAM Demand Hurts Wider Market
Although Micron and Winbond enjoyed healthy boosts in DRAM sales last quarter, its contemporaries did not fare as well. Samsung and SK Hynix saw that segment of their business decline by 3.1 and 4.4 percent, respectively. Memory vendors Nanya and Powerchip experienced even steeper drops of 5.3 and 7.1 percent in the September quarter.
TrendForce blamed the sector’s weakness on diminished demand for server products. Earlier this year, online service companies snapped up large quantities of memory components to cope with a coronavirus pandemic prompted a jump in usage. However, by the fall, that temporary boom had faded, and vendors adjusted their prices down to compensate.
The contraction of the server DRAM segment overshadowed the gains made in end-markets like the PC, mobile, and graphics sectors.
Declines Continue in Q4
Unfortunately, TrendForce does not anticipate the DRAM sector to rebound in Q4. The organization expects the server segment’s softness to act as a drag on the wider market in the holiday season. That said, the company believes interest in the memory type in other applications will remain high.
In September, the analytics group predicted that DRAM prices would be buoyed in Q4 thanks to Nvidia’s new product launches. The firm also said Microsoft and Sony’s new gaming console launches would drive up memory component pricing in Q4. It is worth noting select RTX30 graphics cards, the Xbox Series X, and the PlayStation 5 sold out at launch.
Conceivably, Nvidia, Microsoft, and Sony could rush order enough modules to stabilize DRAM pricing in Q4. On the other hand, Huawei’s inability to source new components and the server memory glut could severely depress prices in the current period. At this point, the market’s near-term health is an open question.