DRAM Industry Sees 24.8% Revenue Surge in Q2 2024, Forecast for Q3 Contract Prices Revised Upward

The DRAM industry experienced a significant revenue surge of 24.8% in Q2 2024, reaching $22.9 billion.

Introduction

The DRAM industry experienced a remarkable revenue surge in the second quarter of 2024, with total revenue reaching $22.9 billion, a significant quarter-over-quarter (QoQ) increase of 24.8%. This growth was primarily fueled by expanded shipments of mainstream DRAM products, which boosted revenues across major manufacturers.

TrendForce’s latest report highlights key trends and factors driving this upward trajectory and provides updated forecasts for DRAM contract prices in the upcoming quarter.

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Key Takeaways:

  • DRAM industry revenue surged 24.8% QoQ to $22.9 billion in Q2 2024.
  • Major players like Samsung, SK hynix, and Micron reported significant revenue increases.
  • Profitability improved across the sector, driven by higher ASPs and premium product sales.
  • Geopolitical factors and stockpiling have led to an upward revision in Q3 DRAM contract prices.
  • Samsung and SK hynix are focusing on HBM production, impacting DDR5 schedules and future pricing.

Quarterly Revenue Surge Driven by Increased Shipments

The substantial revenue increase in Q2 2024 was largely due to expanded shipments and a continued rise in average selling prices (ASP) for DRAM products. Key industry players, including Samsung, SK hynix, and Micron, reported notable increases in shipments and revenues.

The increase in ASP continued from the previous quarter’s trend, driven by several factors, including geopolitical tensions and a high demand for High Bandwidth Memory (HBM) products.

Image Credits: Trendforce

Samsung, the industry’s leading player, reported a 22% increase in DRAM revenue to $9.82 billion, thanks to a 17%–19% rise in ASP and a slight increase in bit shipments.

SK hynix saw even more substantial growth, with a 38.7% revenue increase to $7.91 billion, driven by a more than 20% rise in bit shipments and the certification of its HBM3e products.

Micron also reported a 14.1% increase in revenue to $4.5 billion, despite a slight decrease in ASP. The company’s aggressive clearance of low-cost 1-beta nm DDR5 inventory impacted its performance relative to its competitors.

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Profitability and Market Dynamics

The revenue surge positively impacted profitability across the DRAM sector. Manufacturers benefited from higher DRAM contract prices, full production capacity utilization, and a reversal of previous inventory write-down losses.

Additionally, the higher sales of premium products such as DDR5 and HBM contributed to improved profitability.

Samsung’s operating profit margin jumped from 22% in the previous quarter to 37%. SK hynix saw its margin rise from 33% to 45%, while Micron’s operating profit margin increased from 6.9% to 13.1%, driven by lower contributions from HBM products.

These figures underscore the DRAM sector’s robust financial performance in Q2 2024.

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Varied Performances Among Taiwanese Manufacturers

Taiwanese DRAM manufacturers demonstrated mixed performance results in Q2 2024. Nanya Technology faced a slight decline in shipments due to weaker consumer DRAM sales, although higher ASPs improved its operating margin from -30.7% to -23.4%. Conversely, Winbond increased contract prices for high-density products, boosting ASP by 24%–26%. This led to a 3.7% QoQ revenue growth to $168 million, driven also by higher sales of low-density, high-priced products. Meanwhile, PSMC experienced a 13.5% decline in consumer DRAM revenue but a 2.2% increase in total revenue, partly due to its foundry services.

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Revised Q3 Contract Price Forecasts Reflect Geopolitical Tensions

Looking ahead to the third quarter of 2024, TrendForce has revised its forecast for DRAM contract prices upward due to ongoing geopolitical tensions and increased stockpiling activities by Chinese customers. The revised forecast indicates a 8%–13% increase in conventional DRAM contract prices for Q3, approximately 5 percentage points higher than previous predictions.

Chinese customers have been aggressively stockpiling DRAM due to fears of new US sanctions affecting AI chips and memory purchases. This stockpiling has driven DRAM manufacturers to lock in higher prices and influenced US customers to adjust their procurement prices upward. The increase in server DRAM prices has also had a positive effect on PC DRAM contract price negotiations.

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Impact of HBM Production and Future Capacity Planning

Samsung’s recent focus on producing HBM3e wafers is expected to impact DDR5 production schedules for the latter half of 2024. This shift in production priorities indicates that DRAM prices are likely to remain elevated in the coming quarters. Both SK hynix and Samsung are prioritizing HBM production over DDR5 as they finalize their capacity plans for 2025.

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Conclusion

The DRAM industry has experienced a significant revenue boost in Q2 2024, driven by increased shipments and higher ASPs. The upward revision of contract price forecasts for Q3 reflects the ongoing geopolitical uncertainties and stockpiling trends, which have influenced price dynamics across the sector. As DRAM manufacturers continue to navigate these challenges and opportunities, the sector’s performance will likely remain robust in the near term.

Kumar Priyadarshi
Kumar Priyadarshi

Kumar Joined IISER Pune after qualifying IIT-JEE in 2012. In his 5th year, he travelled to Singapore for his master’s thesis which yielded a Research Paper in ACS Nano. Kumar Joined Global Foundries as a process Engineer in Singapore working at 40 nm Process node. Working as a scientist at IIT Bombay as Senior Scientist, Kumar Led the team which built India’s 1st Memory Chip with Semiconductor Lab (SCL).

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