DRAM growth turned positive across the board, and the six giants soared by 221%

DRAM growth turned positive across the board, and the six giants soared by 221%

The DRAM (Dynamic Random-Access Memory) market is experiencing an upswing.

According to TrendForce statistics, in the fourth quarter of 2023, the global DRAM industry's total revenue reached 17.46 billion USD, increasing by 29.6% quarter-on-quarter. The top six manufacturers all saw a positive increase in revenue for the fourth quarter of 2023, with significant growth rates, especially Powerchip Semiconductor Manufacturing Corporation (PSMC), which had the highest increase at 110%.

Looking back at the fourth quarter of 2022, one year prior, the global DRAM industry's revenue was 12.28 billion USD, with a quarter-on-quarter decrease of 32.5%. The decline was close to the 36% drop in a single quarter during the financial tsunami at the end of 2008. The main reason for the 2022 decline was the decrease in the average selling price (ASP) of DRAM products. Among the six major manufacturers, the quarter-on-quarter revenue growth was all negative, with the highest drop reaching 41.2%. The specific situation is shown in the figure below.

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01

Finally Emerging from Hardship

From the "wailing everywhere" at the end of 2022 to the "rebirth" at the end of 2023, the six major manufacturers in the global DRAM market have finally emerged from hardship, achieving a significant positive increase in revenue across the board.Samsung Electronics, in the fourth quarter of 2022, was the most aggressive in price reduction during the price war at that time. As a result, despite the decline in demand, its shipments increased instead of decreasing, with revenue amounting to $5.54 billion, a sequential decrease of 25.1%, which was the lowest decline among the three major manufacturers.

By the fourth quarter of 2023, Samsung Electronics' DRAM revenue reached $7.95 billion, with a sequential increase of over 50%, the highest among the three major manufacturers. This was mainly due to the shipment of 1α nm process DDR5 chips, which led to a sequential increase of more than 60% in server DRAM shipment bits. In terms of capacity planning, Samsung significantly reduced production in the fourth quarter of 2023. After improving inventory pressure, the wafer input began to rise in the first quarter of this year, with the capacity utilization rate reaching around 80%. The second half of the year is the peak season, and demand is expected to increase significantly compared to the first half, with capacity continuing to rise into the fourth quarter.

For SK Hynix, in the fourth quarter of 2022, the company's revenue was $3.4 billion, a sequential decrease of 35.2%. In the fourth quarter of 2023, revenue increased to $5.56 billion, a sequential increase of 20.2%. The main reason for the growth was the price advantage of HBM and DDR5, as well as profits from high-capacity server DRAM modules, which led to a sequential increase in the average selling price of 17% to 19%. In terms of capacity planning, SK Hynix is actively expanding its HBM capacity, with wafer input increasing. With the mass production of HBM3E, the wafer input for related advanced processes will also continue to rise.

Micron, in the fourth quarter of 2022, saw the most significant decline in market share, at 23.0%, a sequential decrease of 3.4 percentage points, and the largest revenue decline among all major manufacturers, with a sequential decrease of 41.2%. In the fourth quarter of 2023, Micron's shipment bits and average selling price both increased by 4% to 6% sequentially, with revenue reaching $3.35 billion, a sequential increase of 8.9%. Micron's growth was not as strong as that of Samsung Electronics and SK Hynix, mainly because the company's proportion of DDR5 and HBM shipments was relatively low, and it did not fully capitalize on the development wave of AI servers in 2023. In terms of capacity planning, Micron's wafer input is showing a trend of recovery, and it will actively increase the proportion of its advanced process 1β nm capacity, which is used to produce HBM, DDR5, and LPDDR5(X).

Nanya Technology, in the fourth quarter of 2022, saw a slight decline in shipments, but due to the impact of contract price decreases, revenue in that quarter fell by 30%. In the fourth quarter of 2023, the company's revenue increased by 12.1% sequentially, reaching $274 million.

Winbond, in the fourth quarter of 2022, saw a sequential decrease in revenue of 30.3%. In the fourth quarter of 2023, revenue increased by 19.5% sequentially, to approximately $133 million.

Powerchip Technology, in the fourth quarter of 2022, mainly derived its revenue from the production of standard DRAM products, excluding DRAM wafer foundry business. DRAM revenue declined by about 39.5%, and if foundry revenue is included, the decline was 27.4%. In the fourth quarter of 2023, Powerchip's revenue increased by as much as 110% sequentially, and if foundry revenue is included, the total revenue increased by 11.6% sequentially.

Comparing the revenue of these six major manufacturers in the fourth quarter of 2022 and 2023, the changes are very obvious. In 2022, there was a comprehensive negative growth, while in 2023, all turned positive, with significant increases, totaling 221%.

02

The three giants accelerate the development and mass production pace of advanced processes.From a market share and technological content perspective, the global DRAM market remains dominated by the big three (Samsung Electronics, SK Hynix, Micron). Especially in the current era where AI servers are leading market development, high-tech memory products are in high demand, providing more business opportunities for the development of these three giants.

At present, Samsung Electronics, SK Hynix, and Micron are all increasing their R&D investment in 10nm-class DRAM, including the fourth generation (1α nm) and fifth generation (1β nm) versions, to produce high-end memory products such as HBM, DDR5, and low-power LPDDR5.

Looking at the process node development history of the DRAM big three, they entered the 1X (16nm-19nm) phase in 2016-2017, the 1Y (14nm-16nm) phase in 2018-2019, and the 1Z (12nm-14nm) phase in 2020. In the past three years, they have been advancing towards more advanced 1α (approximately 13nm), 1β (10nm-12nm), and 1γ (approximately 10nm, an enhanced version of 1β) process technologies. Compared to 1α, 1β offers about a 15% improvement in energy efficiency and a memory density increase of over 35% at a capacity of 16Gbit.

In October 2022, Samsung Electronics unveiled its DRAM technology roadmap at the Samsung Foundry Forum 2022 event, anticipating entry into the 1β process phase in 2023 for the production of fifth-generation 10nm-class DRAM products, with chip capacities reaching 24Gb (3GB) to 32Gb (4GB). In December of the same year, Samsung Electronics developed the first 32Gb DDR5 DRAM using a 12nm-class process technology and completed compatibility evaluation with AMD. Over the past year, Samsung has been developing 11nm-class DRAM chips and is working on a 3D stacking architecture and new materials for this product. Samsung also stated that it will launch DDR6 memory in 2026 and achieve a native memory speed of 10Gbps in 2027.

With the continuous advancement of DRAM process technology, manufacturers like Samsung Electronics are increasingly introducing EUV lithography equipment and related technologies into their memory product production lines. In January of this year, Samsung Electronics began mass-producing 14nm process DDR5 based on EUV, which has increased the transfer speed to 7.2Gbps, more than double that of DDR4, representing the highest standard for mass-produced memory in the industry today.

On the SK Hynix side, in January 2023, the company used 1α process DDR5 server DRAM for Intel's fourth-generation Xeon Scalable processors and became the first in the industry to receive certification. In May 2023, SK Hynix completed the development of 1β technology, adopting "HKMG (High-K Metal Gate) process, which reduced power consumption by 20% compared to 1α DDR5. The company plans to use the 1β process for high-performance products such as LPDDR5T and HBM3E in the first half of 2024.

Recently, media reports have stated that SK Hynix is forming an alliance with TSMC, aiming to consolidate their position in the AI chip market by pooling the technological expertise of both companies in AI chip packaging. According to industry insiders, SK Hynix and TSMC have formed a One Team strategy, including the joint development of the sixth-generation HBM, namely HBM4. Prior to this, SK Hynix planned to expand its investment in HBM production facilities to meet the market's demand for high-performance AI products. According to SK Hynix's plan, the company's investment in through-silicon via (TSV) related production lines will more than double compared to 2023, aiming to double its production capacity, and plans to start mass-producing its fifth-generation high-bandwidth memory product HBM3E in the first half of 2024. As a partner of NVIDIA's HBM memory, SK Hynix is currently in a leading position in the HBM market. Previous reports have indicated that the company will mass-produce HBM4 in 2026 for the next generation of AI server systems.

To accelerate the mass production of HBM3E and HBM4, SK Hynix is deploying relevant production lines and equipment. At the end of February this year, the South Korean media etnews reported that SK Hynix will introduce 8 EUV lithography machines this year to promote the technological evolution and mass production of high-performance memory products.

It is reported that SK Hynix currently has 5 EUV lithography machines, and by the end of this year, with the additional 8 reported by South Korean media, the total number of EUV lithography machines it owns will reach 13, which can greatly enhance EUV lithography capabilities. The company first introduced EUV equipment in the fourth-generation 10nm process technology 1α, using it in only one chip production step, and in the current 1β process phase, the number of EUV usage steps has increased to 4. As for the 1γ (or 1c) process technology under development, etnews revealed that the amount of EUV usage will further increase to 6 steps.

In addition to adopting new technologies and advanced equipment in DRAM process technology, SK Hynix and Samsung Electronics are also conducting new technology and product research and development in packaging materials.Samsung and SK Hynix are both considering the use of Molded Underfill (MUF) technology in their next-generation DRAM. Samsung has recently conducted large-scale MR MUF process tests on 3D Stacked (3DS) memory, and the results show an improvement in throughput compared to the existing Thermal Compression Non-Conductive Film (TC NCF), but a decline in physical properties.

It is rumored that a senior executive at Samsung Electronics ordered tests on MUF technology last year, concluding that MUF is not suitable for HBM products and is most appropriate for 3DS RDIMM. Generally, 3DS RDIMM is manufactured using Through-Silicon Via (TSV) technology, mainly used for server memory products. TSV involves drilling thousands of tiny holes in wafers or dies to achieve vertical interconnect channels for stacked silicon chips, while MUF is a material that achieves upper and lower connections, reducing the gaps between them, which helps to tightly solidify and bond various vertically stacked chips.

MUF is a type of epoxy molding compound that has garnered attention in the chip industry after SK Hynix successfully applied it to HBM2E production. The compound used by SK Hynix is produced in collaboration with Namics. Samsung plans to develop its own MUF compound in cooperation with SDI and has already ordered the necessary equipment for MUF from Japan to achieve more advanced packaging processes and improve production efficiency.

The above introduces the process technology research and development and memory product mass production of the two major DRAM giants in South Korea. Let's take a look at the situation of another major player, Micron.

In November 2022, Micron sent its 1β DRAM products to the customer's product validation line, taking the lead in entering the 1β node, and has begun preliminary research and design for the next-generation 1γ process technology. In 2023, Micron officially began mass-producing 1β DRAM. Specifically, the product is a 16Gb capacity version of DDR5 memory. Currently, Micron's 1β technology has been applied to various memory solutions of the company, including DDR5 RDIMM and MCRDIMM using 16Gb, 24Gb, and 32Gb DRAM chips, as well as LPDDR5X, HBM3E, and GDDR7 using 16Gb and 24Gb DRAM chips.

At present, 1β is the world's most advanced mass-produced DRAM process node. With the mass production and shipment of 1β, Micron is accelerating the development of the next-generation technology. It is reported that the company plans to mass-produce 1γ DRAM by 2025, and this process product will first be mass-produced in Taichung with an EUV equipment production line.

At the end of February this year, Micron announced the start of mass production of HBM3E memory, and its 24GB 8H HBM3E product will be supplied to NVIDIA, with shipments starting in the second quarter of this year, to be used in the NVIDIA H200 Tensor Core GPU.

Official information shows that Micron's HBM3E is based on the 1β process technology, using TSV packaging, 2.5D/3D stacking, with a data transfer speed of up to 1.2TB/s.

In order to reduce the production cost of high-performance DRAM, Micron is taking multiple paths and not completely relying on EUV equipment. Recently, Micron announced plans to adopt the Nano Imprint Lithography (NIL) technology from Canon of Japan. Micron detailed how to apply NIL technology to DRAM production. NIL refers to the process of imprinting a photomask with a semiconductor circuit pattern onto a wafer, forming complex 2D or 3D circuit patterns in the appropriate positions with a single imprint. By simply modifying the photomask, it is even capable of producing 2nm chips.

NIL technology helps to address a major challenge in DRAM processes: as immersion exposure resolution increases, the number of exposure layers continues to increase, necessitating more exposure steps. Traditional optical systems have difficulties in drawing DRAM layer patterns, while NIL can achieve finer pattern printing. Compared to immersion exposure, the cost of NIL is only 20%, making it a very cost-effective solution. However, NIL technology cannot completely replace the application of EUV in the DRAM production line and can only be partially adopted and substituted.Micron has indicated that it will share more information about its AI server memory products and development roadmap at the Global AI Conference to be held on March 18th this year.

Conclusion

After a slump in 2022 and the first half of 2023, the global DRAM market experienced a recovery in the second half of 2023, allowing major memory manufacturers to finally catch their breath. The tough two years led to a significant decline in revenue and capacity utilization for these manufacturers. With the arrival of a new cycle, the prosperity of the storage chip market, especially the memory chip market, has returned, and the related manufacturers are poised to climb back to the forefront of the semiconductor industry's revenue rankings.

With the surge in AI, the demand for memory, particularly high-performance products, in related server systems continues to rise. Major DRAM manufacturers, especially the top three industry giants, are accelerating the development of advanced process technologies and products, with mass-produced products in a race against each other. This situation is expected to continue for the next two to three years.

Furthermore, driven by market demand and advanced process technologies, the gap in market share and revenue between the global DRAM manufacturers ranked fourth and beyond and the top three industry giants is likely to widen further. This can be observed from the revenue and market share rankings over the past three years.