Korean Memory Players to Focus on Profitability in 2021
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
We predict that DRAM capacity investment will be executed conservatively in 2021. Both SEC and SK Hynix will focus on securing profitability this year. While demand for new data center and PC products is strong, supply growth is limited.
Investment in new DRAM capacity to be limited in 2021
DRAM supply growth is likely to be limited in 2021—we expect DRAM shipments to grow only 15% y-y this year. Both Samsung Electronics (SEC) and SK Hynix are predicted to refrain from investing in new capacity given their profitability-focused management strategies. We expect to see DRAM capacity investment for 40K wpm at SEC and 20K wpm at SK Hynix.
Micron officially stated at a recent investor event that its DRAM capacity investment will be below the industry average. Meanwhile, SEC needs to expand its dividend payouts amid the succession of management rights, and SK Hynix has to cover the W8tn cost for acquiring Intel’s NAND business. Therefore, both Korean memory players must focus on profitability in 2021.
Demand accelerating for data center & PC new products
While memory supply growth is likely to be limited, IT demand grow should be notable. Data center investment by firms such as Amazon, Facebook, and Microsoft, which resumed in December, should accelerate from 2Q21. In 2Q21, shipments of products using Intel’s next-generation server platform Whitley will be in full swing. Intel’s server platform change is an important demand event that occurs every 4~5 years. The Whitley platform supports eight memory channels, contributing to increased memory demand.
Apple’s in-house developed processor the M1, which was released at end-2020, has been well-received in the market. Shipments of Apple PCs are expected to grow more than 50% y-y in 2021. Demand for notebook components should strengthen in 1H21, thanks to a hike in customer orders, amid rising non-face-to-face demand.