Samsung and SK hynix’s commentary suggests both are expecting improvement in DRAM supply/demand balance later in 2016.
Samsung
“Currently, as you mentioned, the NAND market outlook is very strong. Actually, our outlook towards the DRAM market is not that bad either. And our production plan going forward as well as our inventory will be managed flexibly depending on our market outlook and our current inventory as well as work in process is at stable levels.”
“And even though the industry is expected to further its migration towards 20-nano technology, the fact that it’s dealing with more difficult technology and the fact that it takes some time for customers to evaluate and accept new supplies, we don’t expect there to be major increases in supply of DRAM in the near future. And actually we are thinking that the demand supply situation for DRAM will actually improve as we approach the second half of this year.”
SK hynix
“The DRAM market in the first quarter saw falling PC DRAM prices due to lower than expected demand for PCs. Demand for server DRAM was also weakened from the previous quarter as inventory adjustment continued among data center customers that had been leading the server demand. Meanwhile demand for mobile DRAM fared better. The fall in demand due to seasonal factors and inventory adjustment by some customers was offset by new android smartphone launches and increase in the memory content. But it was not enough to turn around the overall DRAM demand.
Looking ahead to the second quarter, DRAM demand is not expected to dramatically recover. However we are anticipating more positive demand momentum around the second half as inventory levels for major customers is not too high today. Demand from new smartphone launch towards the end of the quarter is expected to stimulate mobile DRAM demand with adoption of higher density DRAM to continue and launch of new server chip sets is expected to drive system build-up demand for servers.
On the supply side, suppliers’ CapEx execution is projected to decrease as we move into the second half. Tech migration will start in earnest only after they secure sufficiently stable yield. Thus supply demand dynamics are expected to gradually stabilize in the second half.”
“So to summarize, in the second half of 2016 we will see the 20 nano product on all applications. So in the fourth quarter of 2016, we are going to see bit crossover to 20 nano.”
“So in particular in the second half of the year, we believe that there will be more bipolarized PC demand between the high end and the low end and on the high end side, we are going to see more higher density gigabytes adoption. So overall, the situation will be better.”
THIS ARTICLE IS NOT AN EQUITY RESEARCH REPORT.
Disclosure: At the time of this writing, the acteve Model Portfolio held long positions in MU stock, but did not hold any positions in Samsung Electronics or SK hynix.
Additional Disclosures and Disclaimer
Source: Stock market data provided by Sentieo.
