The market for dynamic random access memory (DRAM) continued its implausible rally in the first quarter, buoyed by rising commodity prices and a slight undersupply that would have been unthinkable just a year ago, according to a DRAM market tracker from information and analytics provider IHS.
Global DRAM shipments from January to March this year amounted to 8.29 billion units as measured in 1-gigabit-equivalent pieces, up a small 2 percent from 8.10 million units in the fourth quarter of 2012. The minor uptick contrasts with the mighty 13 percent expansion posted in the previous quarter, but the relatively small gain in shipments during the period proved welcome nonetheless for the industry.
Overall, the subdued growth of the DRAM market during the first quarter kept supply and demand in balance while also helping maintain prices at a firm level. Both developments were substantially at odds with prevailing DRAM trends in times past, in which a chronically oversupplied space combined with habitually soft pricing to keep the industry on perpetual edge.
This time, however, the tables were nicely turned in DRAM's favor. The market was somewhat undersupplied because of deliberately decreased output from manufacturers. Moreover, prices were up by more than 40 percent in the usually muted commodity DRAM segment, which makes up the majority of DRAM bit shipments. Overall DRAM average selling prices also would have been higher had there not been a drag in mobile DRAM, down 15 percent in pricing due to continued strong demand for the product by devices like smartphones and tablets.
Mobile DRAM in the first quarter accounted for 28.6 percent of all DRAM bit shipments, slightly down from 28.8 percent in the fourth quarter because of the seasonally low shipments of smartphones and tablets. But unlike commodity DRAM, whose share of the total DRAM market continues to dwindle because of slow demand from PCs, mobile DRAM will see its share get bigger moving forward. By 2016, for instance, nearly 41 percent of all DRAM bit shipments will be in the mobile version, IHS predicts.
Mobile DRAM revenue in the first quarter amounted to $2.2 billion, or 33 percent of total DRAM revenue. And in a continued show of strength carried over toward the end of last year, total DRAM revenue was up for a second straight quarter after jumping from $6.4 billion in the third quarter of 2012 to $6.7 billion in the fourth quarter, to the current first-quarter level of $7.1 billion.
Trends to look out for
With DRAM prices climbing in the last six months and DRAM buyers told to expect even higher prices for the second half this year, concern is percolating about DRAM availability for the last six months of 2013 and into 2014. The anxieties, however, are balanced by skepticism, especially because the same concerns aired during the same time in 2011 and 2012 never materialized.
The industry is also far less reliant today on the PC-DRAM's traditional stronghold and source of strength-than it was just a few years ago, even if PCs remain the single largest consumer of DRAM. Last year in the second quarter, PCs for the first time accounted for less than half of the DRAM market, a significant changing of the guard that reflected the growing dominion of mobile devices.
Still, there is more upside potential than a downside risk for the DRAM industry, IHS believes. The diminished reliance on a single application-PCs-and the existence of just three DRAM developers-Samsung, SK Hynix, and Micron after it finishes integrating Elpida Memory-make for a more streamlined supply chain and market.
The forecast for 2013 is for the DRAM industry to climb a strong 18 percent to $31.1 billion, compared to a hard 11 percent contraction last year that left the industry in disarray.
Read more >> DRAM Rally Continues