Commodity DRAM Price Rebound Results in Strong First Quarter

From X-bit Labs: With commodity DRAM prices on the rise, contract price for mainstream DDR3 4 GB modules increased from $17.25 in the beginning of the first quarter to $23.5 at the end of March, a 36.2% increase. As a result, DRAM industry revenue for the first quarter of 2013 remains on par with the previous quarter’s figures, a rare occurrence in the traditionally weak first quarter, according to DRAMeXchange, a division of global research firm TrendForce.

Not all suppliers of dynamic random access memory (DRAM) have seen the same gains, as some produce more commodity DRAM than others; SK Hynix and Micron have benefited the most from the price increases. As DRAM industry restructuring continues, prices are expected to continue supporting revenue growth in the second quarter. South Korean makers Samsung and SK Hynix’s combined market share represents 64.3% of the market, 3% less than in the previous quarter.

Samsung’s DRAM revenue saw a 10% quarterly decrease; as its commodity DRAM production was been reduced to less than 20% of total supply, the supplier did not benefit as much from the price rebound. However, since Samsung’s mobile DRAM output exceeds 40% and mobile DRAM is the most profitable of all memory products, Samsung’s first quarter margins were strong despite the revenue decrease.

As for SK Hynix, the supplier slowed ramping of mobile DRAM production partly due to the fact that Apple’s shipments were weaker than expected; with SK Hynix’s commodity DRAM output at 42% of total production, the supplier was able to maintain 5.7% revenue QoQ growth in the first quarter. U.S. manufacturer Micron experienced the highest revenue growth for the quarter, 23.8%, due in large part to the addition of Inotera’s capacity to the Micron group. As for Japanese supplier Elpida, revenue growth amounted to 11% in the first quarter based on calculations in yen, but due to currency depreciation, conversion to U.S. dollars results in a 2.3% decrease in revenue.

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