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DRAM market unrest comes to an end

Posted: 19 Jun 2014     Print Version  Bookmark and Share

Keywords:IHS  DRAM  Samsung  SK Hynix  Micron 

For quite a considerable length of time, the face of DRAM industry has been marred by countless erratic price hikes and declines, buyouts and uncertainty. But for one industry analyst, the market has reached a point of stability. The storm has calmed.

With far fewer DRAM players left in what has historically been one of the most tumultuous of all chip sectors, it appears as though the wide swings in the supply and demand balance are a thing of the past.

Efforts to garner market share are no longer DRAM companies' primary objectives. Instead of investing billions of dollars to build large fabrication facilities, leading DRAM makers, including Samsung and Micron, are pursuing strategies that will ultimately bring higher pricing, gross margins and profitability. With increased demand from non-traditional markets, such as smartphones, tablets, networking and automotive, DRAM sales growth isn't dependent on the health of only the PC market anymore, resulting in greater stability, growth and innovation.

"DRAM is going to remain stable because you have mature, rationale companies that all understand the market. They all understand the trade-offs and they are going to make the wisest financial decisions," said Mike Howard, DRAM and memory analyst with market research firm IHS. "The end-game for DRAM for years has been if we can get down to three players, everyone will make money."

There's plenty to go around. Worldwide DRAM revenue in 2013 rose 32.5 per cent, to $35 billion, and is expected to increase 19.4 per cent, to $41.8 billion this year, with slower, but still robust growth of just two per cent, to $42.5 billion in 2015, according to IHS estimates.

DRAM market share

"We expect strong demand for server DRAM and graphic DRAM, as well as consistent growth for the PC and mobile markets, while there is growing need for high-density PCs and LTE-based mobile devices," said Jim Elliott, corporate VP of memory marketing for Samsung Semiconductor Inc.

Samsung is the market share leader, accounting for 37 per cent of DRAM revenue in 1Q14, compared with 26 per cent in 1Q07, according to IHS. The second leading player is SK Hynix, which represented 28 per cent of Q1 revenue in 2014 vs. 23 per cent in 1Q07. But the company with the biggest gains is Micron Technology, which came in at 27 per cent in the latest quarter, compared with just nine per cent seven years ago.

In 1Q07 the dynamic random access memory market was fragmented

In 1Q07 the dynamic random access memory market was fragmented.

Micron, Samsung and SK Hynix lead DRAM market

1Q14 shows the big three emerging: Micron, Samsung and SK Hynix.

For Micron Technology, strong organic growth combined with its acquisition of Elpida Memory pushed the company to one of the top three spots. However, Micron does not plan to expand its wafer growth this year, but instead focus on the value DRAM can bring to a system, according to Brian Shirley, Micron's VP of memory technology and solutions.

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