Revenue for third-party dynamic random access memory (DRAM) module makers fell to a two-year low toward the end of last year as the PC market toiled under anemic demand, according to an IHS iSuppli DRAM Dynamics brief from information and analytics provider IHS.
Third-party manufacturers of DRAM modules saw revenue descend during the third quarter of 2012 to $1.41 billion. It was the lowest revenue level in more than two years, equivalent to just half the takings of the industry of $2.87 billion in the first quarter of 2010. The industry appeared to have a moment of reprieve in the second quarter when revenue ticked up slightly to $1.52 billion-only for it to plunge again during the third, the latest period for which full figures are available.
DRAM module suppliers make packages containing DRAM chips. Some producers, like Samsung Electronics, manufacture DRAM modules that they earmark for their own computers as well as sell to other PC makers. DRAM module makers are third-party entities that do not manufacture their own chips but still build modules using chips bought from the suppliers. The DRAM packages they make-usually of the white-box, unlabeled kind-are sold to entities like Dell, which then integrates the memory products into its PCs and other products.
The biggest third-party DRAM module maker is California-based Kingston Technology, with revenue equivalent to half of the entire third party DRAM module space. Other prominent DRAM module makers include Ramaxel Technology from China; Crucial Technology, a division of Micron Technology of Idaho; Smart Modular Technologies, also from California; and ADATA Technology from Taiwan.
The biggest problem facing DRAM module manufacturers has been the lack of demand for computers as consumers favor smartphones and tablets, and as corporate firms slash spending on upgrading PCs. And even though third-party module makers have been making adjustments and pursuing other markets to offset their traditional reliance on PCs, the diversification efforts have not proved enough. Such attempts have included courting other markets that rely on memory, including solid state drives, computing and mobile accessories, and specialty DRAM segments. But until third-party module makers can establish a presence in these other markets, the volatile PC space on which the makers rely most will continue to dictate their fates.
Other issues of concern are also present. For instance, Ultrabooks and other ultrathin computers pose a threat, stressing a lightweight and thin design counter to the way third-party makers make their DRAM modules. Using a DRAM module in a laptop, for instance, adds not only space but also height-a direct contravening of the Ultrabook dictum for minimal size given the current configuration of DRAM modules as stacks of chips.
Another route could also be closed off. Many PC manufacturers, for instance, choose to solder memory directly onto the motherboard. Such laptops, however, would not become eligible for any memory upgrades-becoming once again a negative factor for any third-party DRAM module maker relying on the upgrade space in which to sell their product.
The overall inability to address the Ultrabook market is a grave concern, especially because the desktop market is stagnant. And with superthin PCs poised to take a greater share of laptops as a whole, third-party DRAM module makers won't be able to penetrate the market-unless they find a way to reconfigure their products in order to maintain presence on the motherboard.
How to get their DRAM modules into the Ultrabook and ultrathin market should rank high on the list of things to do for third-party module makers. Otherwise, they may have to seek out new ways to evolve, just to survive.