Mobile Demand to Rebound from 2H20
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
DRAMeXchange has announced memory contract prices for Apr 2020. Server DRAM prices rose 18% m-m. Influenced by Covid-19 effects, PC and server demand was solid, but mobile demand proved sluggish. In 2H20, we expect server demand to slow and mobile demand to rebound.
April server DRAM price shows 18% m-m rise
DRAMeXchange has announced memory contract prices for Apr 2020. The DDR4 8GB PCDRAM price upped to US$28.30 (+11% m-m), and the DDR4 32GB server DRAM price rose to US$143.15 (+18% m-m). The 64Gb MLC NAND price remained flat m-m at US$3.24. PC demand was solid on higher demand for telecommuting and online education services amid Covid-19. Digitimes is estimating that 2Q20 global notebook PC demand will climb 40% q-q. According to Danawa (a PC price comparison website in Korea), notebook PC sales in the third week of March upped 52% m-m. Desktop PC and tablet PC sales expanded 32% m-m and 40% m-m, respectively.
Demand for server DRAM has been strong on greater internet traffic and cloud demand. The supply fulfillment rate grew from 60~70% in 1Q20 to more than 80% in April. Some tier-1 clients from North America have achieved supply fulfillment rates exceeding 90%. It is also positive for server demand that the change from 2Q20 to the Whitley platform supporting PCIe 4.0 is soon to begin in earnest. ASP in 2Q20 is to up 10% q-q for DRAM and 9% q-q for NAND.
Server demand: Mobile demand to rebound from 2H20; server demand to slow in 2H20
As for mobile demand, the prospects for market participants appear mixed. During its 1Q20 earnings call, Qualcomm estimated that the pace of mobile demand decline will worsen from -21% y-y in the 1Q20 to -30% y-y in 2Q20 due to the realization of full-scale impacts from the Covid-19 crisis. Samsung Electronics’ 1Q20 earnings also contained a pessimistic outlook towards 2Q20 smartphone demand. In contrast, the outlooks for Apple and Mediatek are relatively upbeat. In detail, Apple is saying that: 1) its iPhone production has almost completely normalized as of end-March; 2) its Chinese market sales are primed to expand further; and 3) the initial response to the recently released iPhone SE model has been positive. Mediatek forecasts that sales of 5G smartphones in 2020 will range between 110mn~120mn units.
On the negative side for the semiconductor industry, data center investment will likely slow in 2H20 following a brisk 1H20. Google CEO said via email that the company will reduce its investment in both data centers and marketing due to the Covid-19 pandemic. The revenue bases for hyperscalers such as Google and Facebook (the biggest investors in data centers) generate advertising revenue from a wide variety of clients. If the real economy collapses due to the Covid-19 crisis, we believe that ad budget execution will fall and hyperscalers’ investment activity will lessen. By application, semiconductor demand is expected to improve in the mobile arena and slow in the server arena from 3Q20.