Revenue for dynamic random access memory (DRAM) modules made by third-party suppliers rose in the first quarter for the second sequential period in a row, buoyed by rising prices stemming from tight supply of the memory. But in a peculiar twist, a rise in Ultrabook sales could actually derail the very same modules market traditionally reliant on PCs, according to the latest report on the subject from information and analytics provider IHS.
Global revenue for DRAM modules made by third-party manufacturers reached $1.73 billion for the January to March time frame, up a strong 13 percent from $1.53 billion in the fourth quarter last year. The latest numbers are the highest since the third quarter of 2011 when revenue topped $1.81 billion. It also marks the first time since 2010 that two consecutive quarters of growth have taken place.
The figures represent revenue for third-party DRAM module makers-the companies that resell packages of DRAM chips, typically to original equipment manufacturers for desktop and laptop computers. While some memory producers-like Samsung Electronics-make DRAM modules that they earmark for their own computers, third-party DRAM module makers build assemblies using DRAM chips bought from DRAM suppliers, and then sell the packages to entities such as Dell, which integrates the memory package into its PCs. As the designation suggests, third-party DRAM module makers do not allocate any modules they produce for their own use.
The newly improved fortunes of third-party DRAM module makers can be attributed to the precarious balance between supply and demand for PC DRAM. Overall DRAM production lately has shifted in favor of mobile DRAM, which yields higher prices and greater returns to memory suppliers. More mobile DRAM is being made because smartphones and tablets are in greater demand among consumers than computers, where PC DRAM is used.
The emphasis on mobile DRAM and the resulting tightness in PC DRAM supply, in turn, have driven up prices of the DRAM used in DRAM modules. The overall result has been greater profitability and higher revenue for third-party DRAM module makers-something of an anomaly in a space known for perennially depressed results.
The higher revenue is even more remarkable considering that DRAM bit shipments have been trending down because PCs are not selling well.
Bigger Ultrabook sales could turn out to be bad for the DRAM module market
Ironically, a rise in ultrathin/Ultrabook PC sales could threaten the well-being of the DRAM module industry. Rather than employing DRAM modules, the majority of ultrathin PCs use DRAM that has been soldered down in order to comply with the thickness specifications for the superthin notebooks.
And while some memory companies are developing single-sided DIMMs, or dual in-line memory modules, to meet ultrathin requirements, such solutions are still at a height disadvantage compared to soldered DRAM.
PC makers have indicated clearly that the overall thickness, or height, of ultrathins is of paramount concern-a criterion that only soldered DRAM, not DRAM modules, can satisfy so far.
Top DRAM module configuration and major third-party producers
Within the DRAM module market, 4-gigabyte (GB) units have risen rapidly to become the dominant configuration, taking up 53 percent of all module shipments in the first quarter. In comparison, the market share for 2GB modules fell by 8 percent.
By the end of this year, 4GB DRAM modules will make up 63 percent of all DRAM module shipments, and the density will continue to maintain its pre-eminent position in the DRAM module market until 2016.
The top third-party DRAM module maker in the first quarter was Kingston Technology of California, accounting for nearly half of all the revenue made by third-party manufacturers. Other prominent suppliers were Ramaxel Technology from China; Adata Technology from Taiwan; Crucial Technology, a division of Idaho-based Micron; and Smart Modular Technologies, also from California.
The current good times for the DRAM module market could get even better throughout 2013 if PC shipments meet expectations for a strong second half. Should that happen, average selling prices for commodity DRAM could rise from already elevated levels, furthering financial gains for the DRAM module market.
To be sure, second-half sales may still not pan out as hoped for--like what happened in 2011 and 2012 when the last six months of those years failed to deliver as expected. Until then, however, DRAM module makers are clearly savoring the rewards of the market like never before.
Read more >> 2013 Begins Strong for DRAM Modules