According to TrendForce, this year’s biggest DRAM industry event, the announcement that Japanese manufacturer Elpida will join hands with U.S. maker Micron, marks the end of a perfectly competitive market as Samsung, Hynix, and the new Micron team become the three main players in an oligopolistic market. DRAMeXchange, a research division of TrendForce, indicates there is hope for DRAM price recovery, forecasting a 15% decrease in yearly DRAM revenue and a 30% yearly bit shipment increase in 2012. 1Gb average selling price is expected to fall by around 30% this year, an improvement over last year’s 50% decrease. The future of the DRAM market will see a transition from PC DRAM to server and mobile DRAM, important for the cloud storage sector, and it would be prudent for Taiwanese makers to speed up production integration to lower the risk of overreliance on PC DRAM.
Unable to Withstand Rise of Mobile Sector, DRAM Makers’Profits Decrease as Prices Fall
In 2008, the DRAM industry was hit hard by the global financial crisis – German memory maker Qimonda withdrew from the market, and Taiwanese DRAM manufacturers saw capacity cuts of nearly 60%. As the economy gradually recovered, demand exceeded supply, giving DRAM makers a year and a half of good business – DRAM average selling price rose by 8.9% in 2010. Bit output increased as well, and DRAM industry value grew by 72.8% compared to 2009. In 2011, DRAM production increased by 50% over the previous year, as manufacturers continued to advance two generations of process technology a year. With the rise of smartphones and tablet PCs, PC DRAM was in severe oversupply in 2011, with a 50% decrease in average selling price compared to 2010, and a 24.6% decrease in DRAM industry value (figure 1). Aside from industry leader Samsung, none of the memory manufacturers came away without losses, and only a handful of makers remain in the once populated industry.
Samsung Safe with Strength in Technology Migration and Product Mix
TrendForce indicates, bit growth is no longer the key to profitability. Continued technology migration is necessary, but a flexible product mix is a must to cater to the constantly changing demands of the market. For instance, in the first quarter of 2012, Samsung not only dominated the mobile DRAM sector with nearly 60% market share, but the maker was also the most aggressive in transitioning to 30nm process technology in the mobile DRAM sector (figure). The Korean heavyweight was the only DRAM manufacturers to see profits in 1Q12, an indication that technology migration is not the only prerequisite to profitability – proper product mix is a necessity as well.
In conclusion, in the coming oligopolistic market era DRAM makers will need to be reborn to enjoy the fruits of their labor once again, and only improving product diversification and increasing added value will bring profitability.
DRAM Industry Experts Gather at Compuforum 2012, June 7
TrendForce’s spotlight Compuforum, “Mobile DRAM and the Storage Industry” will kick off on June 7 at the Nangang Exhibition Hall in Taipei, Taiwan. Industry experts include Kevin Conley, senior vice president, general manager of SanDisk’s client storage solutions, Scott Graham and general manager of DRAM solutions at Micron as well as Ryusuke Kashiwabara, marketing section senior manager at Toshiba, Lenny Sharp, director of product marketing, desktop and mobile at Hitachi Storage. Kyle Zhou, general manager at Biwin Semiconductor will also speak during the forum and the panel discussion with Nelson Duann, vice president of product marketing at Silicon Motion, while Doreet Oren, director of product marketing at SanDisk will moderate the panel discussion. TrendForce’s analyst team will also draw upon years of industry experience to offer in-depth analysis on the future of memory components and the restructuring of the DRAM industry.
We welcome you to join us at this anticipated event to gain invaluable information of the future of the memory industry. For more information, please visit the Compuforum 2012 page.