Today, whether it is PCs, laptops or artificial intelligence, various industries are accelerating towards DDR5. AI servers for large model applications have increased the demand for DDR5. As memory market demand rebounds, memory chip suppliers have begun to fully increase DDR5 production capacity in the fourth quarter of this year.
The advantages of DDR5 and how it will become the focus of the future storage market
DDR3, DDR4 and then DDR5
In the past ten years or so, DDR3 memory has been a commonly used memory standard in servers. Its clock frequency usually ranges from 800MHz to 2133MHz. It is suitable for small businesses and office environments. With the continuous advancement of technology and the demand for memory bandwidth in application fields such as servers, When higher demands are raised, DDR4 appears.
Compared with DDR3, DDR4 has higher frequency and bandwidth, larger capacity and lower energy consumption. It is reported that the clock frequency of DDR4 memory usually starts at 2133MHz, and then gradually increases to more than 3200MHz. This allows DDR4 to better serve the fields of entrepreneurial servers, scientific computing and data analysis, high-performance computing, etc.
However, the complexity of modern applications is constantly increasing, and the requirements for computing power are also getting higher and higher. In order to improve computing performance, both Intel and AMD regard multi-core CPUs as their focus
As the number of cores increases, actual performance does not increase linearly. One of the reasons that limits performance is the decrease in single-core memory bandwidth. Limited by reduced bandwidth, application latency will increase and performance will decrease. To further improve memory performance, reduce power consumption and enhance data integrity, DDR5 came into being.
The clock frequency of DDR5 memory is usually above 4800MHz, and later there are higher standard memories such as 5600MT/s. In the future, the peak of DDR5 will reach 8800MT/s, and the improvement of DDR5 memory will be huge.
In addition, at the architectural level, the chip density of DDR5 is twice that of DDR4. Combined with the new chip design, this means that the capacity of DDR4 memory chips can be up to 16GB, while the capacity of DDR5 chips can be up to 64GB.
DDR5 provides higher frequency and bandwidth, larger capacity, and can save more power. The operating voltage of DDR4 is 1.2V, while the operating voltage of DDR5 drops to 1.1V, reducing power consumption by 8%
Overall, DDR5 can provide higher efficiency, larger capacity but only requires lower power consumption, so it is favored by the market.
DDR5 Manufacturers
SK Hynix launched the global collection DDR5 product in October 2021, and the time point of releasing the product is slightly ahead of the other two manufacturers. In May this year, SK Hynix announced that it had completed the research and development of the fifth-generation 10-nanometer (1β) technology, the most refined among existing DRAMs, and supplied Intel with DDR5 products for servers using this technology, entering the storage certification for data centers. process. The DDR5 products supplied to Intel this time have a processing speed of 6.4Gbps, which is an increase of 33% compared to the 4.8Gbps of the initial DDR5 sample. At the same time, the high-kMetalGate (HKMG) process is used to reduce power consumption by 20% and increase processing speed by about 14% compared with 10-nanometer (1a) DDR5.
Samsung is the first to successfully apply EUV processing technology to DRAM production. In October 2021, Samsung announced that it had begun mass production of 14-nanometer DRAM chips based on EUV technology
In May this year, Samsung announced the start of mass production of 12nm 16Gb DDR5. Compared with the previous generation of products, Samsung's 12nm DDR5 reduced power consumption by 23%, increased wafer productivity by 20%, and can support speeds up to 7.2Gbps.
Then in September this year, Samsung successfully developed a 32Gb DDR5 product with twice the capacity. Samsung plans to mass-produce 32Gb DDR5 chips by the end of this year.
Compared with Samsung and SK Hynix, Micron started later in the use of EUV lithography. Perhaps Samsung and SK Hynix’s pursuit of EUV lithography has put some pressure on Micron. Micron is now also using EUV lithography technology for DRAM development. It is understood that Micron plans to incorporate EUV into its DRAM development roadmap starting in 2024. On May 26 this year, Micron stated that after the new plant in Zhongke, Taiwan, China is opened, it will introduce the most advanced EUV equipment to produce 1α DRAM process
In October this year, Micron announced that it had applied its industry-leading 1β process technology to the 16Gb capacity version of DDR5 memory. Micron's 1βDDR5 DRAM delivers in-system speeds up to 7,200MT/s and is now shipping to all customers in the data center and PC markets
In the past ten months of 2023, the storage market has experienced a heavy blow. Price cuts, production cuts, and destocking have surrounded the three major manufacturers. However, upon closer inspection, these actions seem to be focused on DDR4 and more mature storage products. The impact of DDR5 does not seem to be too great. On the contrary, major manufacturers are still working hard to promote the technological progress of DDR5.
It is reported that most of the DDR5 DRAM currently used in servers is supplied by SK Hynix, especially the main product 64GB DDR5 DRAM and the high-performance product 128GB DDR5 DRAM.
Some analysts pointed out that SK Hynix’s DDR5 product volume rate is relatively high, so it has successfully grasped the initial market of DDR5. Based on the fourth generation of 10 nanometers (1a) and 14 nanometers (1a), most of SK Hynix's product yields have reached the golden yield of 95%. In addition, some products have a yield rate close to 90% and have entered stable mass production.
According to analysis by Shinhan Investment Securities, among the three DRAM giants Samsung, Micron, and SK Hynix, SK Hynix is also leading the development progress of the new generation process (1β). It is expected that by 2024, SK Hynix can win in the DDR5 field. Market share champion
However, the DDR5 production capacity of SK Hynix alone is far from enough.
According to a report from Yole Development, the transition from DDR4 to DDR5 memory will be very rapid. The large-scale application of DDR5 memory will start in the server and enterprise markets in 2022. By 2023, the mainstream consumer market will widely adopt DDR5 memory. Whether it is desktop computers, laptops or mobile phones, they will make full use of the new generation of memory technology. DDR5 memory shipments will surpass DDR4 memory in 2023, and there will be a rapid transition between the two memory technologies
Thanks to the server market, the usage rate of DDR5 memory will increase by 25% in 2022, and by 2023, the market share of DDR5 memory will exceed 50%. From 2024 to 2026, as DDR5 memory is fully adopted by various markets, the market share of DDR4 memory will be nearly 5%
Facing the strong demand from the massive market, the world's three DRAM giants Micron, Samsung, and SK Hynix have all started preparations intensively and plan to fully increase DDR5 production capacity in the fourth quarter.
It is reported that SK Hynix expects the scale of its two product lines to more than double in 2024. Analysts from Korea Investment and Securities predict that due to the surge in demand for DDR5, which will drive up the average sales unit price of products, SK Hynix's DRAM business is expected to accelerate its turnaround from losses to profits, and the company's overall performance is also expected to end losses in advance.
Another storage giant, Micron, also previously revealed that it will accelerate the transition to DDR5. Micron Technology stated at its financial report meeting at the end of September that it is sampling 128GB DDR5 memory modules, using Micron 32GB DDR5 memory chips. The company expects its DDR5 shipments to surpass DDR4 by the end of the first quarter of 2024, outpacing industry progress
Samsung is also preparing for the strong order demand for DDR5 that may occur next year, and plans to increase DDR5 memory production in the fourth quarter of this year.
In addition to major storage manufacturers betting on DDR5, major chip manufacturers such as Intel and AMD are also fully embracing DDR5 technology.
It is reported that PC platforms such as Intel and AMD plan to launch new platforms next year to further promote and popularize DDR5 memory and attract consumers to upgrade from DDR4. In addition to the consumer market, DDR5 memory is also sought after in the server market.
Intel plans to launch the fifth-generation Emerald Rapids server platform at the end of this year. Coupled with the increased demand for AI servers in the future, DDR5 memory is expected to enter a period of rapid growth.
According to TrendForce data, thanks to the Intel Meteor Lake processor only supporting DDR5 and LPDDR5, which promotes the popularity of DDR5 memory, it is expected to surpass DDR4 and become mainstream in the second half of 2024. Therefore, the average DRAM capacity is expected to grow by 12.4%.
It is worth mentioning that the Ryzen 7000 released by AMD in May 2022 only supports DDR5. For AMD, only supporting DDR5 is undoubtedly a bold attempt. This move will undoubtedly further expand the demand for DDR5 memory, which is enough to show that AMD is betting on Determination to pay attention to DDR5
Signs of price increases have appeared
According to data released by TrendForce, global DRAM revenue in the fourth quarter of 2022 was US$12.28 billion, a 32.5% decline from the previous quarter. The decline even exceeded the 28.9% decline in the third quarter, and was close to the 36% single-quarter decline during the financial tsunami at the end of 2008. , the main reason for the decline is the decline in DRAM product average price (ASP)
As the storage market slumps, DDR5 cannot withstand the pressure, and prices continue to fall.
TrendForce data shows that in the fourth quarter of 2022, DDR4 prices fell by 23%-28% month-on-month; DDR5 prices fell by 30%-35% month-on-month. DDR5 prices continue to fall during the first half of 2023
In fact, the biggest obstacle to increasing the penetration rate of DDR5 is price. One of the reasons for the high price of DDR5 memory is the power management chip PMIC, which is more expensive than DDR4, and the supply is very tight. The long 35-week procurement cycle has made the industry chain As prices continue to rise, the price of DDR5 memory will naturally rise.
The application of DDR5 requires the support of CPU chips. Currently, there are relatively few CPU products that can support DDR5. This is also an important reason that limits the development of DDR5.
However, many experts believe that DDR5 will significantly improve product performance, power consumption and other aspects. As the technology continues to mature and costs continue to decrease, the application fields of DDR5 products will continue to expand in the future.
Statistics from DRAM Exchange, a market research company, show that the fixed transaction price of the latest DRAM specification DDR5 16Gb (2Gx8) in August averaged US$3.40, a month-on-month increase of 7.26%. The analysis pointed out that due to the tough attitude of suppliers in price negotiations, demand-side companies also accepted small price increases.
Previously, data from Zhongtai Securities also showed that the DDR5 module contract price rose for the first time in July, with a month-on-month increase of between 3% and 4%. TrendForce said that the demand side is increasing the inventory of DDR5 products in anticipation of a price rebound. DRAM fixed transaction prices are expected to remain stable in the fourth quarter, but DDR5 may rise slightly, with an increase of up to 5%.
