2Q20 DRAM Contract Price to Rise 10% m-m

The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.

 

 

With demand for online education and remote work being boosted by Covid-19, PC sales look unexpectedly strong. Related components (eg, CPUs, DRAM, and SSDs) are in short supply, and prices are rising.

Sales of PCs and tablet PCs surging on increased online demand

With Covid-19 pushing up demand for online education and remote work, PC sales are surging. Mentioning that PC CPU sales look healthy thanks to increased demand for telecommuting, Intel’s CEO has expressed expectations for solid 1Q20 earnings. According to Danawa, a domestic PC retailer, notebook PC sales in the third week of March jumped 52% compared to the same period in February. Meanwhile, desktop PC and tablet PC sales climbed 32% and 40% m-m, respectively.

Due to the rise in PC demand, some products are in short supply, and related parts prices are climbing. The lowest distribution price for Intel’s 9th-gen Core i7-9700K processor has widened 12% from W405,000 in Dec 2019 to W455,000 as of late. We note that CPU prices had continued to fall in 2H19. The price of Samsung Electronics (SEC)’s 860 EVO 500GB SSD has recently upped 23% to W107,790 from the low of W87,900 seen in Jan 2020.

2Q20 DRAM contract price to rise 10% m-m

It appears that Covid-19 is having a positive impact on PC and related semiconductor demand. However, the majority of recent institutional research forecasts present a bleak outlook for 2020 PC demand. In February, Canalys gave a worst-case estimate predicting 1Q20 PC shipment decline of 21% y-y and 2020 shipment decrease of 9% y-y. Gartner and Trendforce expected 1Q20 PC shipments to fall 19% and 24% y-y, respectively.

Contrary to market expectations, PC shipments look robust, and supply and demand for related parts remains favorable. We expect the DRAM contract price to rise 4% q-q in 1Q20 and 10% q-q in 2Q20. The 2Q20 NAND contract price is also projected to jump 10% q-q.

 

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