COVID-19 has considerably changed the DRAM & NAND industry | Quarterly Market Monitor
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Capex: current forecast assumes a much steeper 2020 capex drop-off
Prior to the COVID-19 outbreak expectations were for combined DRAM and NAND capex of US$38.8 billion in 2020, down 15% year-over-year, including both WFE and infrastructure spend. This decrease was a result of the memory market downturn that plagued 2019—and much of 2018 for NAND—as well as the timing of infrastructure build outs and technology transitions.
“The current forecast assumes a much steeper 2020 capex drop-off, with combined DRAM and NAND capex of US$33.8 billion, down 26% from 2019 and 13% lower than the prior outlook”, asserts Mike Howard, VP of DRAM and Memory Research, part of the Semiconductor & Software division at Yole Développement. “It is expected that the memory suppliers will be more cautious with investments this year due to the uncertainty around second half demand and longer-term economic ramifications. The memory suppliers are likely to err on the side of caution and push spend into 2021 or potentially further depending on market conditions.”
COVID-19: an impact almost immediately felt by the memory suppliers
Indeed, Yole’s analysts point out the shift in first half bit shipments for both market segments, DRAM and NAND.
The widespread work- and learn-from-home transition has provided a near-term boost to the memory suppliers, leading to first half memory bit shipments higher than previously anticipated. Shipment growth has been led by strong server and PC demand and customer buy-aheads due to supply chain concerns, which have helped offset initial COVID-related weakness in the smartphone and consumer markets.
“Looking ahead to the rest of the year, although datacenter demand is expected to remain resilient, we anticipate continued weakness in the smartphone and consumer markets and softening PC demand after the initial surge from the first half wanes”, explains Walt Coon, VP of NAND and Memory Research, part of the Semiconductor & Software division at Yole.