Memory manufacturers increased revenue in the second quarter and want to further raise prices in the third

In the second quarter of 2024, DRAM industry revenues grew 24.8% quarter-over-quarter to $22.9 billion, according to TrendForce data. Most manufacturers increased their revenue through the supply of basic products. Contract prices continued to rise over the past quarter, and in the coming quarter their growth promises to exceed previous forecasts due to geopolitical factors.

Image source: skhynix.com

Key players such as Samsung, SK hynix and Micron increased supplies in the second quarter. Following the trend of the first quarter, the average selling price of memory chips continued to increase. The growth was fueled by the earthquake in Taiwan in early April and high demand for products in the HBM segment, which caused DRAM buyers to intensify their purchasing strategy. The final adjustment to contract prices in the second quarter amounted to 13–18%.

Samsung increased its average chip price by 17% to 19% and increased its supply of bits, pushing its DRAM revenue up 22% to $9.82 billion and maintaining its market leadership position. SK hynix, through certification and mass supply of HBM3E products, increased its supply of bits by more than 20%, due to which its revenue increased by 38.7% to $7.91 billion. Micron’s income in the second quarter increased by 14.1% to $4. 5 billion, despite a slight decrease in the weighted average price of products, and supplies in bits increased by 15-16%. The company has been aggressively selling off inventory of 1-beta DDR5, but has fallen behind larger competitors.

Image source: trendforce.com

Manufacturers managed to maintain profitability due to an increase in contract prices for DRAM, full utilization of production capacity and growth in sales of expensive products – DDR5 and HBM. Samsung increased its operating profit for the quarter from 22% to 37%, SK hynix from 33% to 45%, and Micron from 6.9% to 13.1%. Taiwanese manufacturers showed mixed results in the second quarter. Nanya Technology’s sales of consumer DRAM weakened, but thanks to higher prices, the company increased its operating margin from -30.7% to -23.4%. Winbond raised contract prices by 24-26% – as a result, its income increased by 3.7% to $168 million. At PSMC, revenue from consumer DRAM decreased by 13.5%, but due to the semiconductor contract, the company’s total income increased by 2. 2%, reflecting proactive inventory build-up by customers.

Most DRAM manufacturers completed third-quarter contract pricing negotiations with OEMs and communications service providers at the end of July, with results exceeding expectations. Therefore, TrendForce revised its forecast for an increase in contract prices for conventional DRAM in the third quarter, increasing the growth rate by 5 percentage points. up to the range of 8–13%. In the second quarter, Chinese telecommunications service providers feared new US sanctions on the purchase of AI chips for their needs, so they began to actively accumulate reserves, doubling the scale of purchases compared to the same period last year. This allowed DRAM manufacturers to raise prices, and American telecommunications service providers also increased purchase prices. Rising prices for server DRAM have affected DRAM prices for PCs as well.

Samsung has begun producing HBM3E wafers at its factories to ensure timely supply of eligible finished products once certified. This will likely impact DDR5 production schedules in the second half of 2024. Manufacturers are finalizing capacity plans for 2025 – SK hynix and Samsung give priority to HBM over DDR5, so DRAM prices are unlikely to head down in the coming quarters.