Since demand for computers and consumer electronics has weakened, memory sales have dropped as a result of inventory adjustments by PC manufacturers. Consequently, DRAM revenue has dropped by nearly 30% quarter-over-quarter in Q3 2022, an unprecedented turn of events. At the same time, Micron and SK Hynix slightly increased their market share in the third quarter, whereas Samsung and smaller suppliers dropped.
Sales of DRAM Drop by 28.9%
The DRAM industry earned $18.187 billion in revenue in Q3 2022, down 28.9% from $25.594 billion in Q2 2022, according to TrendForce. Contract prices for memory declined by 10% to 15% during the quarter, whereas spot prices experienced even deeper declines. Analysts from TrendForce claim that sales of all types of memory dropped, including DRAM for consumer electronics, PCs, and even servers, as producers adjusted their inventory due to slowing demand.
When it comes to the top memory supplier, Samsung retained its No.1 position as the global DRAM leader by revenue, though its sales declined by 33.5% quarter-over-quarter, whereas its market share dropped to 40.7% from 43.5% in Q2 2022.
SK Hynix lost 25.2% of DRAM revenue QoQ but increased its market share to 28.8% in the third quarter. Micron's DRAM sales decreased by 23.3% sequentially in Q3 2022, but its share increased from 24.5% to 26.4%. In fact, Micron's DRAM declines were the lowest in the industry.
By contrast, smaller makers like Nanya, Winbond, and PSMC experienced 37.4% - 40.8% declines in revenue and lost market share.
DRAM Makers to Cut Output
Among the ways for memory makers to stabilize the pricing is to limit DRAM bit output by either slowing down capacity expansion or slowing down the transition to more advanced fabrication technologies. Putting equipped fabs on hold is an extremely expensive measure that leads to giant losses as expensive fab equipment has to be depreciated, but decelerating the transition to new production nodes is a relatively easy way to limit DRAM bit output growth.
Apparently, this is exactly what memory makers will do in the coming quarters. Samsung will deploy its new P3L fab next year and will raise its DRAM production capacity, but will slow its transition to newer nodes. SK Hynix will also slow down the transition to more advanced fabrication processes at different fabs. Micron, which just started production of LPDDR5X memory using its 1β node in Japan, will not aggressively ramp up production using this fabrication process. Furthermore, TrendForce believes that Micron could implement more aggressive ways of cutting down its DRAM output.
Smaller makers of DRAM will follow the larger ones with their node transitions, but since they controlled around 4% of the market in Q3 2022, the impact of their actions on prices will be limited.
Good for End Users?
Dropping memory prices are generally good for the end user (and, to some degree, PC makers), especially if you transition to DDR5 memory this year. But after DRAM makers cut their output, prices will inevitably rise when demand stabilizes or gets stronger, so perhaps it makes sense to plan your upgrade now.