Single Quarter Loss Hit Historical High on the Financial Reports of Taiwanese DRAM Vendors

Since October, the Taiwanese DRAM vendor Q3 financial reports showed severe loss due to the continuous dropping DRAM price. PSC, Promos, Nanya, and Inotera suffered a net loss of NT$ 15 billion, NT$8.79 billion, NT$8.77billion and NT$ 4.05 billion respectively. The total loss of the Taiwanese DRAM vendors added up to NT$36.6 billion in Q3 and to about NT$ 90.8 billion in the first three quarters. Among the Taiwanese vendors, PSC and Promos suffered the most loss (see Figure-1). By analyzing the DRAM spot price, DDR2 1Gb eTT price dropped from July US$1.95 to September US$1.23 with a 37% range resulted in PSC’s enlarging loss. Promos, which focused on DDR2 512Mb chip, faced a 27% price drop of DDR2 512Mb eTT from US$0.97 in July to US$0.71 in September. Although the percentage in the price drop is less than the DDR2 1Gb eTT chip, the higher cost structure and the loss on inventory are the main reasons that brought Promos to enormous loss in Q3. At the end of October DDR2 eTT 1Gb and 512Mb dropped to US$1.02 and US$0.53, respectively. Compared to the beginning of October, the price drop range was 15% and 25%, respectively. The total loss in Q4 is expected to be greater than in Q3. This will only make these vendors, who are facing cash outflow, to suffer even more.

Last week in the spot market, transactions remained sluggish. DDR2 1Gb eTT price went up 1% from US$1.02 to US$1.03. DDR2 667 1Gb price dropped 1% from US$0.99 to US$0.98. In general, only the DDR2 1Gb eTT chip price went up to US$1.04. According to market sources, this was driven by certain Chinese major module house, which tried to raise the module quotation and attracted counterfeit vendors to buy parts and gain price spread. The price rally was only a short term phenomenon. With the coming slow season, price trend will remain downward.

3Q08 Sales Ranking of Branded NAND Flash Makers

Global branded NAND Flash makers announced total revenue US$2,766 billion for 3Q08, down from the previous quarter’s US$3,111 billion. Branded NAND Flash suppliers suffered from pessimistic sales, because global economy slump continued to deflate demand for consumer electronic products. Meanwhile, weak consumer confidence in major markets also had negative impact to demand recovering. NAND Flash industry faces severe challenges in terms of the falling average selling price (ASP) and revenue. Oversupply situation has worsened due to market’s weak demand. The industry bit shipment increased 25%, but the ASP dropped around 30% when compared with the previous quarter.

For sales ranking, Samsung took the first position in 3Q and continued to be the marker leader. Samsung’s revenue reached US$1.138 billion and enjoyed the market share with 41.1%. Toshiba announced US$799 million revenue with 28.9% market share. Hynix ranked third with US$397 million revenue and 14.4% market share. Micron and Intel took the fourth and the fifth slots with market share of 7.8% and 5.6%, respectively.

Samsung’s shipment increased more than 25% in 3Q08. However, due to global economic slowdown, seasonal demand didn’t emerge as previously expected. Weak demand dragged NAND Flash ASP down by more than 30%.

Toshiba was also affected by weak demand in the consumer electronic market. The ASP continued to fall despite rising shipment. The company’s revenue reached US$799 million in 3Q with 28.9% market share. Toshiba still ranks at No.2 in the market with a 2.1% market share..

Hynix’s 3Q ASP dropped 23%. Shipment also shrank 14% as the company’s 8-inch fab cut production. All these contributed to 3Q’s lower revenue. Hynix’s announced revenue at US$397 million in 3Q, down nearly 20%. The company still ranks No.3, but the market share slightly fell 1.5%. 

Micron and Intel have also faced a severe situation due to ASP drop. Micron’s shipment increased 10%, but ASP dropped 20%. Currently, Micron focuses on improving processing and yield rate for 34nm NAND Flash products. Micron and Intel’s market share are 7.8% and 5.6% for 3Q respectively, which are roughly the same as the previous quarter.

Numonyx’s 3Q market share was 2.2%. The revenue dropped to US$60 million due to the fall of ASP.