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Despite the recent adjustments of product mix by suppliers, the supply of server DRAM remained tight in 1Q18, thus resulting in high average selling prices. Consequently, the total revenue of the three major server DRAM suppliers rose by 10.3% sequentially in 1Q18 to US$6.975 billion, according to DRAMeXchange, a research division of TrendForce.
According to Mark Liu, senior analyst at DRAMeXchange, it is noteworthy that even with the influx of orders from data centers, the average share of advanced processes of server DRAM has remained low, as Samsung is the only supplier in the industry to have successfully expanded the share of its 18 nm technology in 2018. The migration of SK Hynix and Micron to the 18 nm and 17 nm manufacturing processes, respectively, have been constrained by their limited yield rates in Q1. Overall speaking, server DRAM supply is likely to witness an improvement in 2H18, following the inauguration of some new capacities and adjustments in product mix which will lead to higher product penetration rates.
With the average content per box of server DRAM increasing along with the higher penetration rates of Intel’s Purley platform, the utilization rates of high-density and high-transmission server modules, such as DDR4 32 GB RDIMM 2666 MHz, picked up significantly in Q1 this year. The average margins of the three major DRAM suppliers for server DRAM also rose further.
Samsung racked up 44.6% share on the server DRAM market in Q1, with revenues rising by 6.5% sequentially to US$3.108 billion. In terms of product development, the company has been focused on the market penetration rates of products featuring the 18 nm process, which will account for around 70% of its output by the end of this year, up from 50% now. Its focus on the advanced 18nm process has allowed it to maintain a massive lead over rivals in the cost structure and margin of server DRAM, as products based on 18 nm technologies enjoy a 20% improvement in cost over 20 nm products.
In the second half, Samsung’s overall margins will also benefit from the successive launch of new DRAM capacity and continuing strong demand for contract production from data centers.
SK Hynix staged a brilliant performance in Q1, when the company's overall server DRAM revenues advanced by 13.2% QoQ to US$2.251 billion, due to the large-scale shift of its capacity to server products at the end of last year, and the continuous rise of Server DRAM ASP in Q1.
With regard to the company’s capacity planning, the share of SK Hynix’s cutting-edge process is still relatively low despite facing a continuous influx of server orders. Its products based on the 18 nm process accounting for a minor share in output, and the 21 nm process is expected to remain the mainstream technology for SK Hynix in the second half of this year.
With strained supply boosting the sequential growth of server DRAM bit shipments, and larger-scale increases in quotes than Samsung and SK Hynix, Micron racked up US$1.616 billion in revenues for server DRAM products in Q1, a growth of 14.3% QoQ.
Benefiting from the partial penetration of its 17 nm process and increased output of high-density modules, the overall sales of Micron scored significant improvements, with much of the growth coming from US data centers. Products with the 17 nm process is currently unlikely to be mass production until the first half of this year, as some problems remain unsolved.
TrendForce is a global provider of the latest development, insight, and analysis of the technology industry. Having served businesses for over a decade, the company has built up a strong membership base of 435,000 subscribers. TrendForce has established a reputation as an organization that offers insightful and accurate analysis of the technology industry through five major research divisions: DRAMeXchange, WitsView, LEDinside, EnergyTrend and Topology. Founded in Taipei, Taiwan in 2000, TrendForce has extended its presence in China since 2004 with offices in Shenzhen and Beijing.