Global DRAM Revenue Fell by More Than 30% Q/Q in 4Q22 to $12.3 Billion

This report, published on March 2, 2022, was written by Ellie Wang, analyst at TrenForce Corp.

Global DRAM revenue fell by 32.5% Q/Q to $12,281 million for 4Q22.

The Q/Q decline for 4Q22 is larger than the Q/Q decline of 28.8% for 3Q22 and comes close to the Q/Q decline of 36% for the final quarter of 2008, when the global economy was in the midst of a major financial crisis.

The main cause of the steep revenue drop in 4Q22 was the plummeting overall ASP. DRAM suppliers experienced a rapid accumulation of inventory in 3Q22 due to a freeze in buyers’ demand. Subsequently, suppliers were much more energetic in price negotiations for 4Q22 contracts as they were struggling for market share. Among the major categories of DRAM products, server DRAM suffered the sharpest price drop in 4Q22. Contract prices of DDR4 and DDR5 server DRAM products registered Q/Q drops of 23~28% and 30~35% respectively.

The top 3 DRAM suppliers Samsung, SK hynix, and Micron all posted a significant Q/Q drop in revenue for 4Q22.

Samsung was the most aggressive in the price competition during the quarter, so it was able to raise shipments despite the general demand slump. Its DRAM revenue came to $5,540 million with a Q/Q decline of 25.1%. Even with this result, the firm had the smallest revenue drop among the top 3.

SK hynix posted a Q/Q drop of 35.2% in DRAM revenue to reach around $3,398 million.

On the whole, the 2 South Korean suppliers ramped up shipments because 4Q22 was the final quarter of the 2022 fiscal year for them. However, the large price concessions that allowed for more shipments also caused their respective ASPs to plunge. This, in turn, was reflected in their revenue declines.

Turning to Micron, its DRAM revenue fell by 41.2% Q/Q to reach around $2,829 million. Its fiscal quarters do not align with calendar quarters and end earlier compared with other suppliers’ fiscal quarters. Therefore, the company recorded a larger drop in shipments and thereby suffered the largest revenue decline among suppliers.

Regarding profitability, DRAM suppliers on the whole experienced a massive contraction in operating margin in 4Q22, so they are expected to turn from profit to loss for 1Q23.

Regarding the top 3 suppliers’ plans for developing production capacity in 2023, Samsung is going to optimize the legacy production lines of Line 15, so this fab will experience a marginal drop in DRAM wafer input. The newly built P3L, which is the focus of Samsung’s capacity expansion efforts, has begun pilot production in 1Q23 and will be mainly responsible for driving the growth of the supplier’s total DRAM wafer input for this year.

SK hynix announced in 4Q22 that it will be cutting production, so its DRAM capacity utilization rate is projected to slid from 92% in 1Q23 to 82% in 2Q23. Among SK hynix’s fab sites, the base in the Chinese city of Wuxi will be making the largest production cut. Conversely, the manufacturer maintains its plan to slightly raise production at M16 in South Korea because this fab deploys its advanced DRAM manufacturing process.

As for Micron, it is scaling back production at OMT (its operation in Taiwan) and the Hiroshima base simultaneously. Micron’s DRAM capacity utilization rate has fallen to 84% and is expected to stay at this level through 2023. On the technology front, Micron has begun mass production with its latest 1beta nm process. OMT will also deploy the 1beta nm process within 2023, with wafer input scheduled for the middle of the year and mass production taking place during 2H23.

With regard to Taiwan-based DRAM suppliers, Nanya posted a Q/Q drop of 30% in revenue for 4Q22. Even though its experienced a marginal drop in shipments, its revenue was impacted by the plummeting contract prices. The firm is currently staying with the 20nm process as its main DRAM manufacturing technology, and the output contribution from its 1A nm process has been relatively small. Also, it began cutting production in 4Q22 as its operating margin had already arrived at -19%. Its DRAM capacity utilization rate has dipped to around 70%.

PSMC posted a Q/Q drop of around 39.5% in DRAM revenue for 4Q22. It should be noted that its DRAM revenue only encompasses the sales of its own branded and in-house manufactured DRAM products. The calculation excludes DRAM foundry. Its customers in the consumer DRAM segment are still focusing in inventory reduction, so the demand from them has yet to pick up. If DRAM foundry is included in the calculation, PMSC’s Q/Q decline came to 27.4%.

Lastly, turning to Winbond, the share of known good dies (KGDs) in its DRAM shipments has been fairly large. Therefore, its shipments kept sliding during 2H22 as its clients were adjusting their inventories. For 4Q22, its DRAM revenue fell by 30.3% Q/Q. Looking at its fab sites, Fab6 in Taichung currently maintains a capacity utilization rate of around 50%, while fab KH in Kaohsiung has entered the pilot production phase. In the aspect of manufacturing technology, KH now deploys the 25S nm process, but the supplier also plans to have its 20nm process ready for wafer input in the middle of this year.