The 2009 Outlook of Taiwanese DRAM vendors
The DRAM market has been in oversupply situation and in cyclical downturn for almost two years. The price fell from profitable level to lower than the cash cost, and then even lower than the material cost. Since the Taiwanese DRAM vendors don’t have their own technology, often times the capacity is the stake that is to exchange for the technology with their partners. Therefore the CAPEX of the Taiwanese vendors often surpass their technology partners. Although this kind of relationship brings profit to both sides during the cyclical upturn, it is not easy to control the speed of cash outflow in the cyclical downturn and can easily trap the vendors in operating crisis.
From the CAPEX analysis, the total CAPEX amount of WW DRAM industry reached its peak in 2006 and 2007, especially in 2007 it reached US$ 21.4, included US$ 9.7 billion from the Taiwanese vendors and this part accounted for 45% of the WW DRAM industry CAPEX.
About the cash level of the Taiwanese DRAM vendors, although the 4Q08 financial report has not been announced yet, in 3Q08 the total cash level of the Taiwanese DRAM vendors was less than NT$ 31.5 billion, which was much smaller than the trillion NTD scale in 1H07.
With the increasing DRAM CAPEX, WW DRAM capacity peaked in 2008. The 2Q08 WW wafer starts reached 1.53 million wafers, and Taiwanese DRAM vendors wafer starts also reached 530 K wafers and accounted for 35% of the WW quantity. Afterward, retiring 8 inch capacity and cutting capacity started in September 2008, the total WW capacity cut reached 32%.
Although the DRAM chip price rallied from US$ 0.59 in mid December 2008 to current US$ 1.2 and the price already doubled, the cash cost of the DRAM vendors are still at US$ 1.2 to US$ 1.5. The DRAM vendors are still under the circumstances of cash outflow, the only better news is that the outflow has been decelerating. Therefore, no matter accepting the government’s bailout plan or consolidating the industry, the Taiwanese DRAM vendors have to move on. Only with further consolidation or certain vendor or vendors get out of the market, the supply and demand can finally reach equilibrium, and be positive to the DRAM market.
4Q08 and 2008 Sales Ranking of NAND Flash Brand Companies
The 4Q08 total revenue of WW NAND Flash Brand companies was US$ 2.227 billion, dropped 19.3% from US$ 2.761 billion in 3Q08. Under the continuing impact of global slump and the influence of declining WW consumer confidence, the 4Q08 revenue of NAND Flash brand companies showed signs of decreasing. The overall demand and expenditure for consumer electronics both declined. Although the bit growth in 4Q08 increased 18% QoQ, the overall average selling price dropped 32% QoQ.
The 4Q08 NAND Flash brand company revenue ranking: Samsung’s revenue was US$ 789 million, accounted for 35.6% of the market share and remained its number one position. Toshiba’s revenue was US$ 738 million, accounted for 33.1% of the market revenue as number two. Hynix’s revenue was US$ 266 million, accounted for 11.9% of the market as number three. Micron and Intel were at number four and number five positions, and the revenues were US$ 214 million and US$ 150 million respectively. Numonyx was at number six position with the revenue of US$ 70 million.
As far as Samsung is concerned, the demand of NAND Flash major applications, such as mobile phone and other consumer electronics products, was all under the impact of global economic recession and caused the supply bit growth to decline. Meanwhile, the average selling price dropped 35% QoQ. These reasons had driven Samsung’s sales revenue to drop 30.7% QoQ. The 4Q08 Samsung sales revenue was US$ 890 million. Samsung’s market share dropped from 41.2% in 3Q08 to 35.6% in 4Q08, but still remained the number one vendor.
The supply bit growth of Toshiba kept increasing. But due to the appreciation of Japanese Yen and the drop of NAND Flash average selling price, its 4Q08 revenue declined 5.3% QoQ, with the number of US$ 738 million. Its market share was 33.1%, increased 4.9% comparing to 3Q08. Toshiba was the number two vendor in 4Q08.
Under the influence of retiring part of its 200 mm capacity, the Hynix 4Q08 supply bit growth declined 37% QoQ. Meanwhile, its 4Q08 average selling price also dropped 18% QoQ. Benefiting from the depreciation of Korean Won, Hynix 4Q08 revenue dropped to US$ 266 million, which is a 33% decrease while comparing to 3Q08. Hynix market share was 11.9%, dropped 2.5% QoQ. Hynix currently still remained as number three position.
Although the supply bit growth of Micron and Intel was about over 40%, their revenues were influenced by the drop of average selling price and only remained stable. The 4Q08 Micron average selling price dropped 24% QoQ, with the revenue number of US$ 214 million. Intel’s revenue was US$ 150 million, dropped 3.2% comparing to 3Q08. The market share of Micron and Intel in 4Q08 was 9.6% and 6.7%, positioned at number four and five respectively.
The new comer to the NAND Flash market, Numonyx, was also under the impact of average selling price drop in 4Q08, its revenue dropped to US$ 70 million and its market share was 3.1%.
While observing the change of NAND Flash branding market in 2007 and 2008, the total annual revenue of the brand companies was about US$ 13.368 billion in 2007 and US$ 11.418 billion in 2008, with the annual growth rate of -14.6%. The average selling price dropped 63% from 2007 to 2008.
As for the annual NAND Flash brand companies revenue ranking in 2008: Samsung’s annual revenue was US$ 4.614 billion and gained 40.4% market share, remained at number one position. Samsung’s market share was the same as in 2007. The annual revenue of Toshiba was US$ 3.25 billion, and its market share was 28.1% as number two position. Toshiba’s market share increased 3.1% comparing to the year of 2007. The annual revenue of Hynix was US$ 1.727 billion, and its market share was 15.1%. Hynix stayed at the number three position but its market share declined 4.1% if comparing to 2007. Micron’s annual revenue was US$ 897 million. Its market share was 7.9%, which enjoyed 1.8% increasing when comparing to the year of 2007, and was at the number four position. Intel’s annual revenue was US$ 660 million and its market share was 5.8%, increased 2.1% comparing to 2007. Numonyx’s (STMicro) 2008 annual revenue was US$ 295 million. It was at number six position with the market share of 2.6%, which remained the same as 2007.
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