DRAM Supply Expected to Exceed Market Forecasts from 2H21
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
Micron is planning to expand its A3 DRAM fab by investing NTD400bn. Following SK Hynix and Nanya, the company is increasing investment to solve the DRAM shortage. An increase in DRAM shipments is expected to affect supply-demand conditions in 2022.
Micron to expand A3 fab capacity
Micron is scheduled to start expanding its A3 DRAM fab in central Taiwan from June. The fab is designed to accommodate capacity of up to 80K wpm, and there is currently space to add 50~60K wpm. We expect the company to add the latest 1αnm process, with total investment reaching around NTD400bn. Further investment will be planned according to market demand.
Having developed 176-layer 3D NAND in Nov 2020 and 1αnm DRAM in Jan 2021, Micron’s technology currently exceeds that of its competitors. While the firm lagged behind competitors at the 1znm process, it has managed to increase its net die by around 40% thanks to its excellent 1αnm DRAM technology. The timing of mass production of 14nm and 1αnm DRAM at Korean firms, including Samsung Electronics (SEC), is likely to be yearend.
Capacity expansion to burden DRAM supply/demand in 2022
Memory makers are announcing higher capacity investment plans to resolve the recent DRAM supply shortage. Following announcements by SK Hynix and Nanya in April, Micron has unveiled plans to increase DRAM capacity. From 2H21, DRAM supply is expected to exceed existing market forecasts.
Our 2021 DRAM y-y bit growth estimates stand at +24% for SEC, +20% for SK Hynix, and +26% for Micron. This is higher than the annual industry average growth rate of +21% over the last three years. Increasing DRAM capacity is likely to have a full-fledged impact on supply-demand dynamics from the beginning of 2022. We forecast that DRAM contract prices will rise until 4Q21 and begin to fall from 1Q22. We expect DRAM ASP growth of +17% y-y in 2021 and -13% y-y in 2022.