Memory Markets Poised for Major Changes as COVID-19 Weighs on Demand

Article By : Yole Développement

DRAM and NAND market expectations for 2020 have been reduced due to the economic impacts from the COVID-19 outbreak....

Prior to COVID-19 outbreak, 2020 was shaping up to be a strong recovery year for the DRAM and NAND markets, with both expected to emerge from downturns that had persisted through much of the past two years. Although the situation surrounding the pandemic remains extremely fluid, it will certainly be a headwind to any recovery.

NAND and DRAM account together for the main part of the overall memory market, with 96% market shares in 2019. In the long term, this market revenues are expected to grow up to $82 billion and $95 billion respectively, by 2025. Yole Développement (Yole) announces a 11% CAGR for the NAND market and 7% for the DRAM one, between 2019 and 2025.

“Despite the COVID-19 outbreak, which negatively impacted the smartphone and automotive industries, but spurred demand for server and PC memory for stay-at-home activities, 2020 is expected to be a year of recovery,” asserts Simone Bertolazzi, PhD, Technology & Market analyst, Semiconductor, Memory & Computing, at Yole. “We see the beginning of a new era of prosperity for the memory industry.”

Driven by important megatrends such as mobility, cloud computing, AI and the IoT , the stand-alone memory market has experienced extraordinary growth over the past decade.

However, this exciting growth period ended in Q4-2018 when both the NAND and DRAM markets started experiencing oversupply caused by weak demand. This included lower-than-expected smartphone sales and a slowdown in datacenter demand. Inventory levels increased for memory suppliers and their OEM customers, with ASP ($/Gb) declining by more than 49% in 2019. Meanwhile, combined DRAM and NAND revenue reached ~$106B, down 34% from 2018. In 2019, significant DRAM and NAND capex cuts initiated a market recovery that began in late-2019, and which has continued in 2020.

“Featuring a comparison of YMTC’s 64-layer NAND with the other 64-layer NAND memories from main NAND manufacturers like Samsung, Kioxia and Micron, this study helps to compare the YMTC cell features and highlights the similarities and differences from other 64-layer NAND”, explains Belinda Dube, Semiconductor Memories and Integrated Circuits analyst at System Plus Consulting.

However, besides NAND and DRAM, there exists a broad spectrum of technologies that fit the requirements of different end-systems and markets. NOR flash is the third-largest market with around US$2.3 billion in 2019, fueled by numerous applications including industry and security, such as surveillance cameras, consumer, and automotive electronics, as well as telecom infrastructure, like 5G base stations for example. Despite some seasonality and cyclicality, NOR revenue is expected to grow at a 4% CAGR between 2019 and 2025.

Other technologies, such as volatile and NV SRAM, FRAM , and EEPROM represent “niche” markets that are rather static and collectively account for just about 1.5% of the stand-alone memory market.

On the other hand, emerging NVM technologies, like MRAM, PCM, and RRAM, are taking off in the SCM market. Their combined revenue is expected to reach around US$4 billion by 2025, with a 40% CAGR between 2019 and 2020. In this area, PCM will maintain its leadership until 2025 thanks to the involvement of Intel, which leads the persistent memory business with its OptaneTM non-volatile memory modules.

According to Walt Coon, VP of NAND and Memory Research, part of the Semiconductor, Memory & Computing division at Yole “Market concentration has accelerated dramatically in the last decade and is now remarkably high. Three dominant NAND and DRAM players, Samsung, Micron, and SK Hynix, and two pure NAND players, Kioxia and Western Digital, together hold about 90% of the stand-alone memory market”. All these data are deeply analyzed in the NAND Quarterly Market Monitor – Q2 2020.

In 2019, all major NAND manufacturers were developing the new 1xxL generation and ramping-up production of 92/96L 3D NAND. However, to mitigate the oversupply situation, most manufacturers chose to slow their ramping of 92/96L, and many products launched in 2019 were still based on 64L 3D NAND. In this regard, its 3D NAND Memory Comparison 2019 report, System Plus Consulting gives a complete technology and cost analysis of 3D NAND memories from Kioxia/Western Digital, Samsung, SK Hynix and Micron.

Belinda Dube from System Plus Consulting comments: “In order to accelerate bit growth and reduce NAND cost, all the four top manufacturers have added more word lines to their process. Meanwhile, new competition from YMTC will affect the NAND memory market”.

In addition, in its DRAM Quarterly Market Monitor – Q2 2020, Yole affirms, in the DRAM business, market equilibrium was sought via significant capital expenditure cuts in 2019. Between 25% and 30%, according to Mike Howard, VP of DRAM and Memory Research, part of the Semiconductor, Memory & Computing division at Yole. “And as late as Q3-19, plans existed at suppliers to reduce capital expenditure by as much again in 2020. Both Micron and Samsung are expected to introduce products based on 1z technology by 2020; SK hynix will follow. The most advanced DRAM node by 2025 is expected to be 1 beta”, he adds.

Meanwhile, Chinese players are starting to threaten the market’s equilibrium and could trigger profound changes in the memory business. In the NAND business, YMTC is the leading memory maker in China. The company is currently shipping 64L NAND domestically in low volumes, including SSDs, with 128L production in development and shipments expected in 2021. YMTC’s 2020 ramp-up has been in part hampered by COVID-19, with delays in equipment deliveries/installations at its Wuhan manufacturing site.

In the YMTC 3D NAND Flash Memory report, Belinda Dube from System Plus Consulting asserts: “YMTC memory is expected to pick significant market shares in the NAND market revenue. The YMTC memory enters the NAND flash market as a solution to cater for higher I/O (In/Out) Speed because of the use of advanced CMOS that can be manufactured on a different wafer from the NAND Array wafer. This memory provides the combination of high speed and large density characteristics”.

For Simone Bertolazzi from Yole: “DRAM manufacturing is incredibly difficult, and it will likely take a while longer for China to achieve competitive parity with the industry at-large. CXMT , China’s most advanced DRAM maker, is expected to ramp up production on the 1xnm node in 2020, about three years later than the industry’s leading players”.

As analyzed in the NAND Quarterly Market Monitor, for NAND, Yole expects that significant output, around 4%, from YMTC could reach the market in 2021, while it will take longer for DRAM. Meanwhile, stand-alone NOR flash will remain the sturdiest memory business in China thanks to a well-developed local supply-chain system and the activities of GigaDevice, a key local player.

Without doubts, the memory business is about to change. Yole and System Plus Consulting highlight lot of signs in their report that underline this status. Analysts are daily following the industry and key parameters and discussing with leading memory players to get a clear understanding of their strategy and their ability to innovate. The story will so not stop here.

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