In context: The latest report from market intelligence provider TrendForce further illustrates the grim predicament the global DRAM market found itself in at the end of 2022. According to the firm’s research, global DRAM revenue slid 32.5 percent quarter over quarter to $12.3 billion in Q4. That is down from $18.19 billion in the third quarter and nearly rivals the record QoQ decline of 36 percent from the final quarter of 2008 during the global recession.
TrendForce said the primary cause of the revenue drop was a decline in average selling price brought about by a rapid accumulation of inventory in Q3 2022 due to a freeze in demand. Fearful of losing market share, suppliers negotiated less-than-favorable contracts at lower prices to get inventory moving.
The top three DRAM manufacturers – Samsung, SK Hynix and Micron – saw quarter over quarter revenue dip by 25.1 percent, 35.2 percent and 41.2 percent, respectively. In fact, all of the top six DRAM makers experienced significant QoQ revenue drops.
Samsung was the most aggressive when it came to cutting prices and was thus able to increase its market share from 40.7 percent in Q3 to 45.1 percent in the final quarter of 2022. Both SK Hynix and Micron saw their market shares decrease slightly in Q4 from Q3, from 28.8 percent to 27.7 percent for SK Hynix and from 26.4 percent to 23 percent for Micron.
TrendForce notes that server DRAM saw the sharpest price cuts in Q4, with contract prices of DDR4 and DDR5 products sliding 23 percent to 28 percent and 30 percent to 35 percent, respectively.
Micron executives during an analyst call on Thursday announced plans to accelerate layoffs that would reduce its workforce by 15 percent this year. The company will also write down inventory in the latest fiscal quarter and scale back chip production to deal with the weak market. Shares in Micron are down more than three percent on the news, currently trading at $55.18.
Image credit: Liam Briese