Korea IT H/W: Aspeed Posts Record Sales In July
Aug. 7, 2019 11:08 AM ET
Hyundai Motor Investment & Securities
Summary
- Aspeed, key leading indicator of server demand, saw a 26.7% MoM increase in sales in July, a monthly record.
- July NAND contract prices up 1.5% MoM for a 64Gb MLC wafers, 7.2% MoM for 128Gb MLC wafers, and 25.6% MoM for 256Gb TLC wafers.
- PC, smartphone demand recovering and server demand expected to recover from Oct; Overweight the memory semiconductor sector.
Aspeed’s record sales signal sharp recovery of 4Q hyperscale server demand
Aspeed, which supplies 80% of hyperscale server BMC globally, saw its July sales hit a record high of NTD215mn. The previous peak was in January when sales hit NTD208mn; sales have been fluctuating since, before hitting a new record in July. Since Aspeed’s sales lead semiconductor chip demand for servers by three months, we expect to see a meaningful rebound in server semiconductor chip demand in October. With the recovery of PC and smartphone demand shoring up NAND contract prices, the sharp bounce back of the server demand leading indicator is a strong signal that a recovery of the memory semiconductor sector is in order. Meanwhile, NAND wafer prices are displaying a healthy rebound in July, led by TLC wafers. The price of 512Gb TLC wafers rose 24.5% MoM; 256Gb TLC wafers 25.6% MoM; and MLC wafers 7-10% MoM. Amid the decline of overall inventories across all segments, surging NAND wafer contract prices should have a positive impact on memory chipmakers’ earnings. Intel’s PC CPU sales rose YoY for a second consecutive quarter; it has begun to ship the 10nm Ice Lake CPU for notebooks to PC makers, and cut the price of its 14nm notebook CPU, which is fuelling the recovery of notebook PC DRAM demand. Additionally, we expect mobile DRAM shipments to start recovering in 2H19 amid a recovery of smartphone demand in Chinese-speaking countries, especially for Huawei. Mobile DRAM contract prices slid 15% QoQ entering 3Q19, but the shipment value will likely increase nevertheless, as the DRAM capacity of Android smartphones is expanding by more than 50%.
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