Predictions Rising Towards Increased Memory Demand from 4Q20
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
Hyperscalers are expected to resume their data center investment from 4Q20. Smartphone makers are to continue accumulating inventory in 4Q20. And, consumers are giving warm responses to recently announced new tech products, including the PlayStation 5, the Nvidia RTX 30 series, and Intel Tiger Lake.
Memory semiconductor demand to pick up in 4Q20
Predictions are rising towards increased memory semiconductor demand from 4Q20. Having reduced their data center investment in 3Q20, hyperscalers such as Google, Amazon, and Microsoft are known to be now in discussions with chipmakers regarding 4Q20 memory purchases. As early as December, hyperscalers’ data center investment activity should start picking up again. Of note, hyperscalers’ DRAM inventory has recently upped to the eight-week level, a notable expansion from the four-week level seen at the beginning of the year.
With the US continuing to place sanctions upon it, Huawei is expected to keep building up its inventories through 4Q20 in order to deal with chip delivery uncertainties. Seeking to occupy the vacant place of Huawei, other handset makers (including Xiaomi, Oppo, and Vivo) will likely beef up their memory purchases. Against this backdrop, we estimate that 4Q20 DRAM and NAND contract prices will clock at -8% q-q and -7% q-q, respectively, performing better than the existing market projections of a more than 10% q-q price drop for both products.
Consumer giving warm responses to new IT products
Another factor brightening the outlook towards 4Q20 memory demand is favorable consumer reactions to recently announced new IT products. Having begun on Sep 18, pre-orders for Sony’s next-generation game console, PlayStation 5, completely sold out in just one minute after the start of orders in some countries, including Korea. We estimate that if 15mn PlayStation 5 units are sold in 2020, such a level of sales will boost global DRAM demand by 2% and NAND demand by 5%.
Meanwhile, Nvidia’s next-generation graphics card, RTX 3080, is also experiencing a surge in pre-orders. Of note, it is presently difficult for general consumers to purchase this new product?the live store at which Nvidia scheduled to release it was disrupted by overflowing demand and excessive traffic. Elsewhere, Intel’s newly announced Tiger Lake CPU is drawing approving consumer reviews thanks to its strong GPU performance, which has nearly doubled compared to the previous version.