Will the memory market turn the corner?

The investment in memory semiconductor production facilities is expected to experience another  year of decrease after 2019. The oversupply of memory on the market continued until the second half of 2019.

Investment in DRAM production facilities in 2020 is forecasted to decrease by 14.8% compared to the previous year, down to $ 16.782 billion. The investment in NAND flash production facilities is projected to be at a level of $ 3,645 million in 2020, decreasing by 6.2% compared to the last year.

Investment in DRAM however is expected to increase by 18.8% in 2021 on a year over year basis. While the investment in the NAND is forecasted to  increase by 7.1% in 2021 on a year over year basis.

SK Hynix in its first quarter earnings call announced to maintain its previous plans for significant reduction in production facility investment compared to 2019. 

Micron and Samsung Electronics seem to be cautious about any additional investments in production facilities.  The major producers minimize the expansion of memory production capacity to help rising prices.

We expect that the memory market will turn into a growth trend again. Although demand for smartphones has drastically decreased under  the coronavirus impact, it has been reported that the supply of server memory as used in the cloud infrastructure is in deficit due to much more frequent use of remote services. Because of this, memory prices are on the rise. The fixed price of 8GB Gigabit DRAM for PC in April rose 12% to $ 3.25. It is only 10 months since June 2019 that the monthly DRAM price has exceeded $ 3, and this price increase is the highest in three years since April 2017.

As of Q2, 2020 demand for server DRAM is likely to exceed supply by 20% which can signify for the whole memory market a rising phase of the cycle.

RR.