DRAM Team Memory & Storage Division
Jun. 7th, 2012
DRAM Market Update – 2012 & Beyond – The End of the Perfect Competitive Market–
完全競爭市場的終結
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• Marco Economy • 2012 DRAM Industry Outlook • Demand – PC (NB, Ultrabook, DT) & Mobile (Tablet and Smartphone)
• 5 Years Demand Landscape
Demand
• Changing Mix of Supply • Supply by Application • Companies’ Profitability and Market Share • New Market Cycle
Supply
Conclusion
Agenda
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Source: DRAMeXchange, IMF, Jun. 2012
2012: 2nd Dip Unlikely but Slow Recovery WW GDP Shows High Correlation with DRAM Industry
Asia Financial Crisis
3.8% 4.1%
2.6% 3.6%
4.7%
2.4% 2.9% 3.7%
4.9% 4.5% 5.2% 5.4%
2.8%
-0.6%
5.3% 3.9% 3.5% 4.1%
WW GDP Growth YoY
-50%
0%
50%
100%
0
10,000
20,000
30,000
40,000
50,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013F
Total DRAM Revenue & YoY Unit: M , USD
Revenue YoY Growth Revenue
Financial Crisis
0%
Dot Com Bubble
Minor Recession??
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Source: IMF, DRAMeXchange, Jun. 2012
2011 2012E
WW
3.85% 3.53%
2011 2012E
EU
1.44% -0.32%
2011 2012E
JP
-0.75% 2.04%
2011 2012E
US
1.74% 2.11%
2011 2012E
Brazil
2.73% 3.03%
2011 2012E
China
9.24% 8.23%
2011 2012E
India
7.24% 6.86%
2011 2012E
Russia
4.30% 4.01%
2011 2012E
3.15% 2.65%
South Africa
■ 2011 GDP ■ 2012 GDP
However, EU and China present the most uncertainty, (unresolved EU debt and China’s economic slow-down).
Year of 2012
2012 – Market Gradually Improves in 2H Solid GDP Growth in US, JP and Other Emerging Countries
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Source: IMF, DRAMeXchange, Jun. 2012
Year of 2012
US
2.1%
EU
2.02%
Russia
2.02%
Brazil
5.17%
WW
4.04% South Africa
5.75%
China
3.32% India
8.16%
JP
0%
The annual percentage of CPI (Consumer Price Index) is used as a measure of inflation. A high CPI may urge government to raise interest rate and tighten monetary.
However, Uncertainty Remains… CPI Represents Potential Risk of Inflation among Regions
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2012: Healthier sufficiency (yet still oversupply), ASP (PC+non PC DRAM) drop slows (YoY ~35%) Future key watch points: (1) Supply: Status of DRAM capacity withdrawal; Elpida’s resolution of financial restructure (2) Demand: Stimulations in 2H’12 (Win8, Ultrabook, Intel’s Ivy Bridge & Romley)
Source: DRAMeXchange, Jun. 2012
2012 DRAM Industry Outlook More Rational Market, Revenue Improves Slightly
Recession -15.0%
30.4% 33.8%
7.4%
-50%
0%
50%
100%
150%
2006 2007 2008 2009 2010 2011 2012E
DRAM Supply/Demand/Sales YoY Growth & Sufficiency
Sales Growth (YoY)
Supply Bit Growth (YoY)
Demand Bit Growth (YoY)
Sufficiency Ratio
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SOC
256MX16
256MX16
256MX16
256MX16
256MX16
256MX16
256MX16
256MX16
64bit 2GB
Channel-0
64bit 2GB
Channel-1
16
16
16
16
16
16
16
16
SOC
256MX16
256MX16
256MX16
256MX16
256MX16
256MX16
256MX16
256MX16
64bit 4GB
Channel-0
64bit 4GB
Channel-1
16
16
16
16
16
16
16
16
4GB to 8GB Upgrade
Segmentation is the Key for Memory Solutions Always Connected: LPDDR3x16/x32; however, x32 product is the only solution that Intel Haswell supports. Not Always Connected: DDR3LMx16 or DDR3Lx16
LPDDR3 x16 Simulation when Ultrabook Density Increases to 8GB
Potential risks of CMD loading and RLC when running 1600Mhz.
Source: DRAMeXchange, Jun. 2012
Ultrabook Memory Solution Unsettled DDR3L, DDR3M and LPDDR3 x16/x32 Are the Options
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Tablet PC Smartphone Featurephone
High-end, Mainstream Segment
2012 Shipment (E)
76.2M (83.7%) 2012 Shipment (E)
467.5M (77.2%) 2012 Shipment (E)
529M (55%) Non-iPad: 8Gb → 16Gb LPDDR2 iPad: 4Gb → 8Gb LPDDR2
H: 8Gb LPDDR2, eMCP and discrete solution
NAND-based MCP 1+512
M: Various Offering, 4Gb LPDR1/ 8Gb LPDR2
Low-end Segment
2012 Shipment (E)
15M (16.3%) 2012 Shipment (E)
172.8M (22.8%) 2012 Shipment (E)
428M (45%) 4Gb → 6Gb LPDDR2 MCP 4+4 or 4+2
LPDDR1→LPDDR2 (2Q) NOR-based MCP 32Mb
Source: DRAMeXchange, Jun. 2012
2012 Demand Outlook – Mobile DRAM Smartphone Growth Continues at a Blazing Pace
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AP33
MSM8X60
OMAP44X0
U8500
MSM7227A
MT6575
APQ8055
AP40
MSM8X74
OMAP64X0
SP30
MSM8X28
OMAP54X0
MT658X
MSM8X26
OMAP4XX0
MT6577
Source: DRAMeXchange, Jun. 2012
2012 2013
Note 1: □Quad □Dual □Single Note 2: ■LPDDR3 ■LPDDR2 ■LPDDR1
U9500
2013: Fast Transition in Mobile Market LPDDR2 & Dual-core Chips Dominate Market
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6.7% 5.2%
7.5% 7.1% 10.0% 10.9%
5.8% 8.8%
0.3%
9.7%
13.4%
8.7%
0%
10%
20%
DRAM Demand, 2010~2012(E)
Source: DRAMeXchange, Jun. 2012
3,416 3,593 3,862 4,137 4,553
5,049 5,344 5,813 5,832
6,400
7,256 7,887
0
2,000
4,000
6,000
8,000
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12E 3Q12F 4Q12F
OthersTotal PC demand
Unit: M, 1Gbequiv
3,416 3,593 3,862 4,137 4,553
5,049 5,344 5,813 5,832
6,400
7,256 7,887
0
2,000
4,000
6,000
8,000
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12E 3Q12F 4Q12F
Total DRAM demand
Unit: M, 1Gbequiv
1Q12 demand below expectation(weak PC build), oversupply continued. Market estimates demand will improve in 2H, representing stronger seasonality.
Smartphone Ultrabook Tablet PC
DRAM Demand QoQ Change, 2010~2012(E)
2012 DRAM Demand Status 1Q12 Below Seasonal, Demand Gradually Improves from 3Q
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Source: DRAMeXchange, Jun. 2012
2011 2012E 2013F 2014F 2015F
Server
Desktop
Notebook
Ultrabook
Tablet PC
Feature & Smartphone
Commodity DRAM Total Available Market Shrinking
Thin and light guarantees the popularity of adoption. Market will be driven by Mobile DRAM and low-power consumption DRAM.
In 2015, Ultrabook + Cellphone + Server will take majority of DRAM consumption.
5 Years DRAM Demand Landscape Everything is about Cloud Computing Trend
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Source: DRAMeXchange, Jun. 2012
2012 Bit Growth 27% 2012 Bit Growth 51% 2012 Bit Growth 1% 2012 Bit Growth 34% 2012 Bit Growth 30%
2012(E) Production Mix by Output Chip
Samsung, benefitting from strong vertical integration, has highest non-PC contribution. Companies whose PC DRAM portion >50% have to reconsider product mix adjustment.
34%
23%
32%
7% 5%
42%
23%
16%
11%
9%
60%
10%
25%
3% 3%
51%
23%
5%
14%
6%
66%
5% 6%
21%
2%
Non-PC DRAM
The Changing Mix of Supply Faster Diversification, Better Profitability
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0%
20%
40%
60%
80%
100%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12E 3Q12F 4Q12F
PC Server Mobile Consumer Graphics
2012: Supply Bit Growth of 30.5% (v.s. Demand Bit Growth of 33.8%) Server, Mobile PC, Graphic
2012 DRAM Output by Production
PC Segment 2011: 53% of total output 2012: 44% of total output
PC DRAM 2012 YoY Supply Bit Growth: 20.0%
Graphic/ Consumer
16% Mobile
22% Server
18% Server DRAM 2012 YoY Supply Bit Growth: 42.1%
Mobile DRAM 2012 YoY Supply Bit Growth: 67.5%
Consumer DRAM 2012 YoY Supply Bit Growth: 17.1%
Graphic DRAM 2012 YoY Supply Bit Growth: 27.9%
Source: DRAMeXchange, Jun. 2012
Supply Drivers of 2012: Server, Mobile Server and Mobile Take 40% of Total Supply Production
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Mobile DRAM Revenue
1Q12 DRAM Operating Margin
(1) 15%
(2) -18%
(3) -68%
(4) -26%
Samsung’s leadership is unshakable, mainly benefitting from its complete product portfolio and strong Galaxy family sales.
30nm
40nm
50/60nm
2Q12 Mobile DRAM Node Breakdown
Source: DRAMeXchange, Jun. 2012
Mobile DRAM Revenue
Non-Mobile DRAM Revenue
1Q12 Mobile DRAM Market Share By Revenue
Samsung, 59.6%
Hynix, 18.9%
Elpida, 14.7%
Micron, 5.0%
Winners of PC DRAM Outperform Here, too Samsung is By Far the Strongest Leader in Mobile DRAM
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Supply +
Suppliers’ Capex ↑ Full Utilization
Shortage
Buyers’ Double-booking Utilization Recovery
Oversupply
ASP ↓ Suppliers Start Cash-burn
Consolidation
PCs Lose Demand Momentum Mobile Devices Drive Consumption
Supply -
Utilization Cut Inventory Correction
Source: DRAMeXchange, Jun. 2012
The Broken Cycle, A New Battlefield Consolidation Currently Taking Place
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2011: PC 68%, S 7%, G 3%, C 7%, M 14%
2011: PC 55%, S 22%, G 4%, C 15%, M 4%
Chip QTY %
PC 5,273 49%
Server 1,251 20%
Graphic 453 5%
Consumer 907 10%
Mobile 1,269 16%
Total 9,153 100%
Micron + Elpida will increase penetration of: Server: Utilizing Micron’s customer base Mobile: Micron’s NAND + Elpida’s Mobile DRAM is
competitive, will penetrate high-density MCP market.
Product Diversification Simulation after Integration
Source: DRAMeXchange, Jun. 2012
PC, 60%
Server, 10%
Graphics, 3%
Consumer, 3%
Mobile , 25%
Elpida
2012
PC, 51%
Server, 23%
Graphics, 6%
Consumer, 14%
Mobile , 5%
Micron
2012
A More Complete Product Offering Their Cooperation Makes Up What Insufficient Originally
Non-PC DRAM will account for more than 50% of 2012 output after integration.
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DRAM ASP (Contract & Spot)
Sufficiency
Typically, sufficiency ratio is a leading indication of future ASP trend (negatively correlated). However, 1H12 ASP trend more strongly reflects supply uncertainty. In 2H, a better demand/supply balance will result in more solid ASP development.
Source: DRAMeXchange, Jun. 2012
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12E 3Q12F 4Q12FDDR3 2Gb Contract 4.22 2.83 1.88 2.06 1.34 0.98 0.94 1.17 1.34 1.45DDR3 2Gb Spot 4.40 2.81 2.04 1.82 1.15 0.85 0.96 1.09 1.26 1.36
$0
$1
$2
$3
$4
$5
-10%
0%
10%
20%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12E 3Q12F 4Q12F
De-coupling Trend of ASP & Sufficiency
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DRAM Demand – stimulations in 2H, triggering stronger seasonality By 2012, cloud (server) computing (ultrabook/tablet PC/smartphone) represents majority of DRAM consumption. Ultrabook memory solution decided by product segmentation – DDR3LM, LPDDR3 both applicable. Dynamic changes in smartphone and tablet segments, low-end & cost competitive solutions gaining ground →
imposing ceiling on mobile DRAM portion of total BOM cost.
DRAM Supply – becoming oligopoly market Less price slashing behavior, representing a more rational market → stable price trend. In 2012, DRAM market still in oversupply, permanent withdrawal of some capacity necessary. Both economies of scale + product diversification are crucial for profitability.
DRAM Sufficiency & ASP 1Q → weakest quarter of 2012. 2H’12 ASP gradually move upward (assuming limited impact from China and EU). Suppliers should focus on value-added products: DDR3LM, LPDDR3, on-board memory and DDR4. Commodity & mobile DRAM price gap will narrow – mobile DRAM is becoming commoditized in terms of price. The faster DRAM consolidation occurs, the sooner DRAM ASP bottoms out
Key Take-away
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Thank You DRAM team Ken Kuo [email protected] Avril Wu [email protected] Wilson Miao [email protected] Lavender Shih [email protected]
NAND Flash team Wayne Chen [email protected] Sean Yang [email protected] Alan Chen [email protected] Esther Lo [email protected]
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