The last rise of DDR3?

2024-06-09

Not long ago, media reports indicated that Samsung and SK Hynix will ultimately permanently shut down their respective DDR3 production lines, and the two South Korean memory manufacturers may cease to supply DDR3 memory to the market in the second half of this year. Subsequently, the market heard news of the price increase of DDR3 products. The reasons for this change by the two companies are not hard to understand. In the current era of AI's popularity, the demand for related memory is far exceeding the supply. To capture the market in the next decade and for profit margins, it is also understandable that the storage giants are focusing on products such as HBM and DDR5.

SK Hynix's HBM supply has been sold out for most of 2024 and 2025, which leads to an expected increase in the price of all types of HBM (including HBM2E, HBM3, and HBM3E) memory by 5% to 10% next year. Some media predict that by 2025, due to the strong demand for HBM, the market share of HBM will more than double, growing from 2% in 2023 to 5% in 2024, and then to 10% in 2025. It is worth mentioning that DDR5 memory is also affected by the demand for HBM. It is reported that its price will increase by 20%, as the top three memory manufacturers shift their production focus to HBM. As for the server and personal computer market, they have long stopped using DDR3.

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01

Is DDR3 really in its twilight years?

DDR3 was first introduced in 2007 and has been on the market for 17 years. Compared to DDR2, DDR3 starts with a logical bank count of 8 and prepares for 16 in the future (DDR2 only has 4-bank and 8-bank designs). In terms of packaging, the number of pins has increased, with specific packaging specifications that must be environmentally friendly (8-bit chips use 78-ball FBGA packaging, and 16-bit chips use 96-ball FBGA packaging), which is different from the various packaging specifications of DDR2. In terms of burst length, the prefetch is 8 bits, resulting in a fixed burst transfer cycle of 8, and new modes are added with the prohibition of burst interrupt operations, making it more flexible than DDR2. In terms of addressing timing, the CL cycle is improved and the range is different, with additional delay design changes, and a new write delay parameter is added, which is different from the CL range of DDR2. In terms of new features, it has a reset function that can stop operations to save power, as well as a new ZQ calibration function that automatically verifies the resistance values, which DDR2 does not have.

For memory products, iteration is like the normal metabolism of humans. The advancement of design and breakthroughs in process technology have made the product's energy consumption lower and lower, the transmission speed faster and faster, and the storage capacity larger and larger. With the advent of DDR5, is DDR3 really going to say goodbye to the era?

Fields such as network communication, television, surveillance, set-top boxes, industry, and smart homes still widely use DDR3. According to data from Zhongtai Electronics, in 2022/2021, DDR3 accounted for 8%/8% of DRAM, reaching 7.5/7.4 billion US dollars.

DDR3 user interfaces show many significant advantages in design and performance. Compared with the previous generation, DDR3 memory modules have achieved a significant increase in transmission rate, which has significantly accelerated the speed of data reading and writing, effectively meeting the needs of multitasking and large-scale data computation. At the same time, its low power consumption characteristic significantly reduces the energy consumption of computer systems, further enhancing battery life, bringing great convenience to mobile device users. DDR3 memory modules show high compatibility, which can be adapted to desktops, laptops, servers, workstations, and other devices, ensuring the stability and reliability of system operation. This wide compatibility provides users with more freedom of choice, without worrying about the compatibility of memory modules, thus greatly reducing user troubles.

DDR3 prices have been rising since September 2023, with DDR3 4Gb increasing by nearly 10% by November, and DDR3 2Gb increasing by 14%.At the end of 2023, DDR3 industry players generally hold a positive attitude and are full of confidence in the development of the market. Yu Chuan Company believes that as inventory is gradually digested, the industry has passed the cyclical trough and is gradually moving towards the recovery phase. Jing Hao Technology Company is also promoting niche memory products for automotive specifications to meet the diversified needs of the market. The supply chain revealed that after more than a year of inventory reduction in the industry, the recent increase in terminal consumer electronics orders has led to a surge in demand for DDR3 chips. In response to customer needs, Huabang and Yu Chuan have sharply increased their stock of substrates to cooperative factories, and Jing Hao Technology's wafer input volume is also on the rise. As the market warms up and prices reverse, players are preparing to welcome the grand occasion.

It is not difficult to find that a considerable number of semiconductor companies are still making efforts in the DDR3 market, with the main focus on the Internet of Things field.

Huabang's DDR3 pricing increased by about 10% in the second quarter, mainly for 2Gb and 4Gb DDR3 quotes. Therefore, Huabang is going all out to promote the development of the DDR3 specification DRAM market. The factory in Kaohsiung has fully released its production capacity this year, aiming to seize the favorable market opportunity of the rise in DDR3 prices. It is predicted that the contribution of DRAM total revenue brought by Huabang's DDR3 products this year is expected to reach 50%, thereby fully grasping the rich business opportunities brought by the transfer of orders. As the process technology is upgraded to the DDR3 stage, the company has increased its investment in the construction of DDR3 production capacity. The Kaohsiung factory has introduced advanced 20-nanometer equipment, and the production capacity is gradually being released, which is expected to become the main manufacturing base for Huabang's new process DRAM products in the future.

In the Chinese mainland market, GigaDevice also has a variety of DDR3 products. According to the company's official website, GigaDevice's niche DDR3L is compatible with 1.5V/1.35V voltage supply, with a read and write rate of 1866Mbps, up to 2133Mbps, meeting the needs of mainstream applications. GigaDevice has a variety of niche DDR3L products, which can provide 1Gb/2Gb/4Gb capacity, x8/x16 data interfaces, and adapt to different temperature range application scenarios of 0 ~ 95℃ / -40 ~ 95℃ / -40 ~ 105℃.

On May 17, Yu Chuan Company Chairman Lu Chaoqun pointed out that at the current stage, the market is in the process of recovery, especially in the first half of this year. Yu Chuan's DDR3 series products have entered the Wi-Fi 6 and Wi-Fi 7 markets. The industry generally expects that the market vitality will significantly increase in the second half of 2024, and it is expected that by 2025, the market will maintain a strong momentum of continuous growth, and the overall DRAM price is expected to return to the pre-epidemic level.

02

The maturity period of DDR4 has arrived

Just like all products, DDR3 will eventually face market elimination.

The reality is that although the price of DDR3 has started to rise, its market players are still doing "loss-making business". Taiwan memory companies such as Nanya Technology, Huabang Electronics, and Elite Semiconductor Memory Technology (ESMT) were still in a loss-making state in the first quarter of 2024. However, the loss in Q1 2024 has narrowed, and ESMT's loss (1.79 million US dollars) has narrowed both month-on-month and year-on-year.Memory products are upgraded every two to three years. As global key memory suppliers are mainly focused on DDR5 or HBM memory, niche DRAM manufacturers will gain new development prospects from DDR4 this year. DDR4 is currently approaching the transition from the previous DDR3 phase, which is expected to promote the growth of prices and sales volume. According to relevant manufacturers, it is expected that the shipment of DDR4 will soar significantly, and the average selling price of chips will also soar significantly.

This means that DDR4 will take over the niche market currently occupied by DDR3. With Samsung and SK Hynix ceasing production of DDR3, the transition from DDR3 to DDR4 has already begun. It is reported that Taiwan's memory manufacturers will prioritize DDR4 from 2024 to increase revenue. The combination of shipment volume and average selling price (ASP) will help their growth this year.

Some Taiwan's memory manufacturers are considering expanding their product range and developing 2Gb DDR4 solutions to meet customers' demand for lower density and lower cost. Mainland Chinese manufacturer GigaDevice also plans to launch 8Gb DDR4 and LPDDR4 products.

03

Second half of the memory market

Backend manufacturers are optimistic about memory industry orders starting from the second quarter of 2024. To cope with the rising trend of memory prices, memory chip manufacturers plan to terminate production reduction measures and gradually increase capacity utilization to enhance profitability. The impact of increased upstream supply on the overall memory market is still to be further observed. However, according to industry insiders, memory backend companies generally expect an increase in order volume.

The market shows that the expected growth in orders in the 3D NAND field will be particularly significant, and the growth momentum of orders in the DRAM field will also be evident from the second quarter. It is reported that SK Hynix and Micron Technology have started to increase their capacity utilization, especially for high-end DRAM products such as HBM and DDR5 (obviously driven by the growth of the server field by AI).

At the same time, sources say that the overall capacity utilization of the memory industry in the first quarter has rebounded to more than 80%, and it is expected to further rise to more than 90% in the second quarter. Some media have said that the main NAND supplier Kioxia will also end production reduction measures, and its capacity utilization will also rebound to more than 90%.

The active stocking of supply chain manufacturers is driving the continuous development of the memory market, thereby promoting the sales performance of memory backend companies. The performance of several Taiwan's backend companies increased in February. Mao Mao Technology's comprehensive sales data in February showed that its sales reached NT$1.78 billion (about 56.52 million US dollars), a year-on-year increase of 23.64%, and a month-on-month increase of 4%. ChipMOS also said that its sales performance in the memory field is strong, surpassing the sales performance in the display driver IC (DDI) field. Although customers are still mainly placing short-term orders, it is expected that the sales in the first quarter will increase month-on-month. The merged sales data released by Powertech Technology in February shows that its sales were NT$5.88 billion, a month-on-month decrease of 3.86%, but a year-on-year increase of 12.6%. In the period from January to February 2024, its cumulative merged sales reached NT$11.99 billion, a year-on-year increase of 17.3%.

However, according to the data of the flash memory market, the latest quotations of memory bars in the channel market fell across the board in the latest week, and consumer storage demand continued to be cold in the second quarter. It is worth noting that the continuous growth of HBM product output will squeeze the supply of DRAM products. There is a conflict in the process between HBM, DDR, and LPDDR5X. When producing products with the same bit quantity, the amount of wafers required for HBM3E is about two to three times that of DDR5. Since the production process of HBM also involves TSV packaging technology, this makes the production cycle of HBM increase by 1.5 to 2 months compared to DDR5.As more production capacity is inclined towards the server market, consumer terminals may face a structural shortage of storage resources. Under the immense pressure of costs, terminal manufacturers may reduce storage configuration to cut costs. In the second half of 2024, veterans like DDR3 and DDR4 may still have a chance to compete.

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