Consumer Products to Offset Reduced Data Center Investment
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
During pre-orders for the Sony PS5 on Sep 18, available supply quickly sold out. Server DRAM prices are expected to drop by 15% q-q due to reduced data center investment in 4Q20; however, consumer products, such as the Apple iPhone 12, Sony PS5, and Nvidia RTX 30 series, should compensate for the slowdown.
Sony PS5 pre-orders strong
On Sep 16, Bloomberg reported that Sony’s PS5 production plans for this fiscal year have been cut from 15mn units to 11mn due to processor yield problems. The news negatively affected semiconductor sector stock prices.
Responding to Bloomberg’s report, Sony officially refuted the content of the article, stating that it has never cut its production plans. Taiwanese foundries and back-end houses that manufacture SoCs for the PS5 also said that SoC production and packaging are proceeding smoothly, and shipment targets remain unchanged. The PS5’s SoC was developed by AMD and is being produced by TSMC using 7nm processes.
Pre-orders for Sony’s next-generation console, which started on Sep 18, sold out within one minute in some countries, including Korea. The PS5 is equipped with 16GB of DRAM and 825GB of NAND. If 15mn units are sold, it will account for 2% of global DRAM demand and 5% of NAND demand in 2020.
New mobile device and console effects to be felt through end-2020
Strong pre-order demand is also being seen for Nvidia’s next-generation graphics card, the RTX 3080. On Sep 17, Nvidia announced that it would release the RTX 3080 via its online store, but orders were disrupted by excessive demand and traffic.
We expect server DRAM contract prices to decline 15% q-q in 3Q20 due to reduced investment from hyperscalers in 4Q20. However, new consumer products, such as Apple’s iPhone 12, the Sony PS5, and Nvidia’s RTX30 series, should compensate for the slowdown. In 4Q20, DRAM ASP (including PC DRAM and mobile DRAM) is forecast to slide 8% q-q.