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TMT <strong>Memory</strong> Devices Technology 8 October 2010 abc Bit shipments for handsets, % of total DRAM demand, MB bn Smartphone units and MB/system growth 500 400 300 200 100 - 12% 10% 8% 6% 4% 2% 0% 600 500 400 300 200 100 - 500 400 300 200 100 - 2009 2010f 2011f 2012f 2009 2010f 2011f 2012f Smart phone units (m) Telecoms % of total Blended MB/sy stem (RHS) Source: IDC, HSBC estimates Source: IDC, HSBC estimates Handsets Relevance: Telecoms is becoming a major consumer of DRAM, accounting for c9 % of DRAM bit demand this year and growing to c10% in 2012e at a CAGR of c57% during 2010-12e. Within telecoms, smartphones are a major driver of demand growth. Mobile DRAM prices tend to be higher on a bit basis, as memory vendors need to work closely with mobile phone makers to incorporate custommade solutions for specific handsets. Upside/downside factors. Upside factors include launch of higher-specification smartphones due to competitive pressures, more demanding apps and operating systems including Android ‘Gingerbread’. Downside factors include high mDRAM ASPs suppressing the inclusion of more content/system. Catalysts. Better than expected smartphone unit shipment and product mix guidance/results from major handset manufacturers. Mobile DRAM We think smartphones are driving rapid mobile DRAM bit growth through both unit shipment growth and content per box. Mobile phones have had a very limited amount of DRAM in the past. In our view, the development of smartphones is now mirroring that of PCs, driven by resourceintensive wireless broadband, multimedia and multitasking. As more demanding apps become the norm, we expect rapid advances in processors, screens, volatile and non-volatile storage. Mobile DRAM, which currently uses mostly DDR1, is migrating rapidly to DDR2 to support higher speed processors now found in smartphones. We forecast mDRAM bit growth to rise c102%, 92% and 112% y-o-y for 2010-12e. We assume DRAM content/system for smartphones to rise c31%, c39% and 57% for 2010-12e, to around 390MB by 2012e. We forecast smartphone unit shipments to rise 54%, 39% and 35% during the periods, accounting for c38% of total handsets shipped globally by 2012e (2009: 15%). At the cusp of an explosion in mDRAM. Like desktop PCs a decade ago, broadband connectivity, multitasking, more complex applications and more powerful graphics are driving demand for faster processors. We expect smartphone makers to attempt to differentiate their products not only through different operating systems, but ability of handsets to run applications quickly. Smartphone DRAM to surge to support computing power. Qualcomm’s Snapdragon, Samsung’s Hummingbird, Apple’s A4 processor and other ARM-based SoCs run up to 1GHz already. We believe smartphones 23
TMT <strong>Memory</strong> Devices Technology 8 October 2010 abc processing power will increase rapidly, in part to support requirements for next-iteration operating systems such as Android 3.0 (Gingerbread), which will require 1GHz processors, 512MB DRAM and a 3.5” screen as minimum hardware requirements. Highend processors including Qualcomm’s dual core Snapdragon, NVIDIA’s next generation Tegra with dual cores and fast GPU (running DDR2 as opposed to DDR), and Samsung’s ‘Orion’ dual core processor SoC are set to be become commonplace by end-2011e. c1GB by end-2011 in higher-end smartphones is likely, we think. Apple’s iPhone 4G and Samsung’s Galaxy S, as well as the now discontinued Google/HTC Nexus One already have 512MB of onboard mDRAM. Smartphone DRAM usage, % of total handsets 250 80% 200 60% 150 40% 100 50 20% - 0% 2009 2010f 2011f 2012f GB m % of total handsets Samsung, Elpida and Hynix are leaders in mDRAM The higher-end mDRAM market (i.e. 128MB upwards) is dominated by major DRAM players that are capable of customising MCP (multichip packages) for handset vendors. DRAMeXchange estimates mobile DRAM rose to c12% of Hynix’s product mix and c20% for Samsung. Several vendors have low power mobile DDR2 (LPDDR2) in mass production at 5xnm process and above, and some have 4xnm process parts in engineering or customer sample stages. The latter development should deliver significant competitive advantage. With the 4xnm Hynix part, power consumption was reduced to c30% of 50nm process produced mobile DDR2. Samsung already ships up to 2Gb LPDDR2 produced at 56nm; its 46nm 2, 4 and 8Gb LPDDR2 parts are currently at the engineering sample stage; we believe mass production could start in 2H10. Hynix completed development of its 2Gb LPDDR2 using 44nm node technology in January 2010 and is currently at the customer sample stage. Elapid’s 2Gb LPDDR2 DRAM produced on 4xnm process started sampling in August 2010, and mass production is slated to start this month (September). Micron/Nanya is to mass produce its 2Gb LPDDR2 in 3Q10. Source: IDC, HSBC estimates 24
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Asia Memory-Bad memories fading

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