10.31.25
For the quarter, equipment sales into DRAM fabs rose 18% sequentially, to $840M. That is still about a third lower than the peak level of $1,278M reached in the first quarter of this year. During the last downturn, these sales averaged $427M per quarter for five quarters. Since things started to improve in the third calendar quarter of 2023, those sales have averaged $848M per quarter, nearly double the downturn level. Tel is the only equipment company that guides out for two full quarters. They even break it out by memory type. Their forecast for the next two quarters averages $893M per quarter in DRAM equipment sales. That will be ~6% higher than this quarter. With two quarters past and two more forecasted since the surge in DRAM sales seen in Q4-24 and Q1-25, those two periods look like anomalies. They were about 30% higher than the current DRAM equipment run rate at Tel. Still, compared to the last downturn, DRAM spending now is more than 2x the level during the last downturn.
NAND capital expenditures at Tel have now been out of the doldrums for four quarters. Over that time, they have averaged $347M per quarter. The forecast from the company for the next two quarters is $317M per quarter, mostly a continuation of what has been happening. This quarter, at $435M, was the highest of this current recovery. The five quarters before that averaged $108M per quarter, fully 75% below where spending is now.
Total equipment sales for the company were down from the prior half, with almost all that drop coming off the high plateau in DRAM spending earlier this year. For the quarter, total equipment sales were up by around 12%. Within that rise were increases in sales to South Korea, China, and Southeast Asia/Other (that is mostly Singapore), partially offset by drops in Japan, North America, and Taiwan. The country data suggests that the surge in DRAM spending earlier this year was distributed across the Big Three. Both South Korea and Taiwan saw surges in sales in those two quarters compare to the prior periods. The overall equipment market, viewed from Tel, has strengthened in the last twelve months. Field solution sales at the company are also at a record high this quarter, up 15% this quarter compared to the prior four. That is a measure of fab utilization.
The company’s forecast for calendar year 2025 total WFE sales is unchanged at $115B. Investment this year is primarily driven by leading-edge logic and DRAM for AI applications. NAND is “showing signs of recovery.” NAND spending is at the leading edge (my commentary: companies are accelerating their node transition schedules) while investment in mature nodes is subdued (wafers aren’t being added at existing NAND nodes). Looking ahead (I assume that means the next year or so), DRAM investment is “surging for both HBM and general-purpose DRAM. Double-digit growth is anticipated to continue in the following years. That is a bold statement to make in the semiconductor industry. They cited rising SSD demand (from AI and non-AI data centers, implied not stated) will boost NAND utilization and drive investment growth. WFE spending at mature nodes will be flat from current levels. All the action is at the leading edge, in both memory and logic. The company said last quarter that HBM investments are being revised down because of technology and yield improvements. No such comment this quarter. I wonder if that is still true or if it has been overwritten by the current enthusiasm. Just a quarter ago, the NAND outlook was continued softness. Now the excitement around AI has spread to NAND, via SSD demand for servers.
DRAM is expected to grow double digits in 2026 over 2025 with acceleration in the second half as additional cleanroom space becomes available. NAND demand is rising for data centers, but PC and mobile demand remains weak. This is an important point. All of the recent surge has been because of data center demand. The Q&A was not information dense, with respect to memory
– S. Hughes (short MU)