The headline to this article could also be something like "Why increases in capital spending may not lead to a DRAM glut". My bolding below. They say it is "slightly different this time around"; IMHO, it is a big difference. It also takes longer to produce a complete wafer than before and the yields tend to be lower. But as usual, Mr. Market likes to believe that what was will always be, so he can pretend to be certain about what the future will hold by extrapolating from the past.
DRAM market braces for slower growth, says IC Insights
Jessie Shen, DIGITIMES, Taipei
Wednesday 3 October 2018
The DRAM market is known for being very cyclical and after experiencing strong gains for two years, historical precedence now strongly suggests that the DRAM ASP will soon begin trending downward, according to IC Insights.
One indicator suggesting that the DRAM ASP is on the verge of decline is back-to-back years of huge increases in DRAM capital spending to expand or add new fab capacity, IC Insights indicated. DRAM capital spending jumped 81% to US$16.3 billion in 2017 and is expected to climb another 40% to US$22.9 billion this year. Capex spending at these levels would normally lead to an overwhelming flood of new capacity and a subsequent rapid decline in prices.
However, what is slightly different this time around is that big productivity gains normally associated with significant spending upgrades are much less at the sub-20nm process node now being used by the top DRAM suppliers as compared to the gains seen in previous generations, IC Insights noted.
At its analyst day event held earlier in 2018, Micron presented figures showing that manufacturing DRAM at the sub-20nm node requires a 35% increase in the number of mask levels, a 110% increase in the number of non-lithography steps per critical mask level, and 80% more cleanroom space per wafer out since more equipment - each piece with a larger footprint than its previous generation - is required to fabricate sub-20nm devices. Bit volume increases that previously averaged around 50% following the transition to a smaller technology node are a fraction of that amount at the sub-20nm node. The net result is suppliers must invest much more money for a smaller increase in bit volume output, IC Insights said.
The recent uptick in capital spending may not result in a similar amount of excess capacity, as has been the case in the past, IC Insights continued.
The DRAM ASP is forecast to rise 38% in 2018 to US$6.65, but the market growth will cool as additional capacity is brought online and supply constraints begin to ease, IC Insights said.
A wildcard in the DRAM market is the role and impact that the startup China-based companies will have over the next few years, IC Insights continued. It is estimated that China accounts for approximately 40% of the DRAM market and approximately 35% of the flash memory market.
At least two China-based IC suppliers, Innotron and JHICC, are set to participate in this year's DRAM market, IC Insights noted. Although China's capacity and manufacturing processes will not initially rival those from Samsung, SK Hynix or Micron, it will be interesting to see how well the country's startup companies perform and whether they will exist to serve China's national interests only or if they will expand to serve global needs.
digitimes.com |
