The authors are analysts of Shinhan Investment Corp. They can be reached at firstname.lastname@example.org and email@example.com, respectively. --Ed.
Additional downward adjustment of IT demand forecasts for 2020
We further revise down our demand growth forecasts for IT products in reflection of the spread of COVID-19: smartphones from -7% to-15% and PCs from -4% to -7%. Our projection for server chip demand is kept unchanged in view of the rising data traffic on strong demand for non-face-to-face services.
DRAM makers to aggressively cut back on supply
Faced with concerns over slowing demand, chipmakers are forecast to aggressively reduce their supply. They see no reason to stick to their capex and supply plans. The directionality of the DRAM market should remain intact if DRAM demand growth exceeds 10% (supply growth on migration to finer processes) in 2020. We expect DRAM demand to increase 14% YoY this year.
Semiconductor market to stay on an uptrend, adjusting pace temporarily
DRAM makers are unlikely to make adjustments to their profit targets. They have just hit a speed bump. The current DRAM cycle may reach its peak later than previously expected due to the COVID-19 outbreak, but the peak level should not be lowered. We slightly revise down our earnings projections for 2020 and keep those for 2021 unchanged. The market consensus for 2020 earnings needs to be adjusted downward in the near term. We believe the current phase maybe an opportunity to reduce share price volatility.