YG PRESS NEWS – DRAM market: towards a certain uncertainty?
Consolidation has helped the DRAM industry stay profitable, but will China’s entrance end the stability?
- The DRAM industry experienced its first operating loss since 2012 in Q1-23 with margins dropping from 9% in Q4-22 to -16% in Q1-23.
- Q1-23 revenue results came in lower than expected as shipments were 13% lower than projected.
- Suppliers continued to build inventory in Q1-23. Suppliers are now holding more than 13 weeks of inventory.
- Although it is still too early to call Q1-23 the bottom of the current DRAM down cycle, there are increasing signals that the worst of the downturn is behind us and that the industry is already improving.
According to Yole Intelligence, part of Yole group, in the DRAM Market Monitor, Nearly a decade ago, the DRAM market underwent consolidation, resulting in three dominant players. This consolidation has sustained the industry’s profitability, as capital intensity is increasing and the margins that DRAM suppliers earn are needed to invest in further technological development. Similar to other semiconductor sectors, China has set its sights on achieving self-sufficiency in DRAM production. However, recent policy changes in the US will have significant ramifications for China’s ability to realize this goal, particularly due to severe restrictions on shipments of wafer fabrication equipment (WFE) into China. The outcome of the next few years will likely determine whether China can overcome these obstacles and succeed in the DRAM market… For more information about this analysis, please contact us!