PC OEMs are sitting on 10 weeks-plus of DRAM, says Trendforce

Pandemic-induced supply chain imbalance did it

PC OEMs are holding 10 weeks or more of DRAM inventory thanks to hesitancy of procurement departments to stock memory chips, says market intelligence firm TrendForce.

Trendforce said this is all attributable to the pandemic: supply chain issues impeded the ability to produce and sell consumer electronics. Since companies couldn't manufacture the devices, the companies didn't stock memory chips to go in them.

As a result, most DRAM fabs underwent an average 5.8 per cent quarter-on-quarter drop in Q4 '21 shipments to around $25bn, leading them to lower prices.

Q1 '22 isn't looking that grand either for the market as those with supply will focus on getting rid of extra stock, which in turn will cause DRAM output to fall even further.

A few suppliers bucked the trend – like SK Hynix, which rose 2.8 per cent quarter-on-quarter to have the second highest market share of DRAM manufacturers at almost 30 per cent, just under Samsung, which fell slightly from 44 to 42.3 per cent quarter-on-quarter. Trendforce said the company will most likely have a decline in shipments next quarter, which will serve as a type of market correction on SK Hynix's success.

The rise in market share for SK Hynix did not save it from a fall in Q4 '21 performance. The South Korean supplier's operating profit margins were reduced by 45 per cent. Comparatively, Samsung's fell 50 per cent and Micron's 41 per cent. That's also expected to continue in Q1 '22.

"Manufacturers can only increase the proportion of advanced processes and optimize their product portfolio to reduce the impact brought on by price pressure," wrote Trendforce.

Likewise, Samsung named the global supply chain as the reason it failed to meet its own guidance for DRAM shipments in the last three months of 2021. Samsung alluded to protecting profit over volumes by saying it would not be engaging in aggressive sales tactics during its investors call. ®