Chipmakers Pinning Hopes on Rebound in Mobile Demand
Contract prices of server DRAM products have begun to fall after staying high for months due to growth of the untact economy following the novel coronavirus outbreak.
Market research firm DRAM Exchange said on July 31 that the price of a 32GB DDR4 DRAM for servers posted US$134 in July, down 6.4 percent from the previous month,.
The price has risen steady since late last year, from US$106 at the end of 2019 to US$109 in January this year, US$115.5 in February, US$121.3 in March and US$143.1 in April. It had been maintained at US$143.1 for three months in the April-June period, helping Korean DRAM makers improve their performance. Samsung Electronics posted 5.43 trillion won in operating profit in the semiconductor sector in the second quarter of 2020, up from 3.99 trillion won in the previous quarter. SK Hynix's operating profit in the same period rose 143 percent from the previous quarter to 1.95 trillion won.
However, market watchers predict that it will not be easy for the chipmakers to enhance their business performance in the second half of 2020 as DRAM prices began to fall. Server DRAM prices dropped as DRAM manufacturers increased the supply of DRAMs for servers while reducing the supply of mobile DRAMs, they say.
In addition, cloud companies such as Microsoft and Amazon have increased their purchases of server DRAMs, raising their inventory levels significantly out of their concern about disruptions in the supply of semiconductors due to the novel coronavirus. However, cloud companies have decided to build a fewer number of servers than expected by the market in the second half of the year, fearing that an economic downturn could lead to a fall in demand in the future. This precipitated the downtrend in server DRAM prices. Another negative factor for the memory semiconductor industry is Intel’s delay in releasing a new CPU for servers.
Falling DRAM prices for servers are compelling Korean chipmakers to rely on a rebound in the mobile chip market.
In the NAND flash sector, companies other than Samsung Electronics are losing money, Their business performance could worse in the second half of 2020 due to the slowdown of a price hike.