(The following press release from IHS was received by e-mail. The sender
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Can the DRAM Market Return to Growth This Year?
El Segundo, Calif. (Jan. 22, 2013)—After two straight years of contraction, the
global DRAM market has the opportunity to rebound to double-digit growth in
2013, but major risks—including potential continuing weakness in the PC
market—easily could undermine hopes for a sales increase this year.
DRAM revenue in 2013 is forecast to reach $30.0 billion, up 14 percent from
$26.4 billion last year, according to a preliminary forecast presented in an
IHS iSuppli DRAM Market Brief from information and analytics provider IHS. This
year is set to mark the first time since 2010 that global DRAM market revenue
“The DRAM industry has been clobbered over the past two years by a combination
of weak PC sales and an inflated manufacturing base,” said Mike Howard, senior
principal analyst for DRAM & compute platforms at IHS. “The industry this year
is expected to benefit from a return to growth in the PC market, combined with
consolidation in suppliers. However, if PC growth falls below expectations and
supply remains somewhat inflated, the DRAM market could be headed for a third
straight year of decline in 2013.”
PC shipments determine DRAM fate
After declining in 2012 for the first time in 11 years, PC shipments in 2013
are forecast to expand by 8 percent. A major factor driving the expected
rebound in 2013 will be the new generation of touch-enabled ultrabooks running
the new Windows 8 operating system.
Nonetheless, there is significant risk to this assumption. The high price of
ultrabooks, in particular, has thwarted adoption of the superthin computers,
and the public at large has been more enamored of flashier gadgets like tablets
If ultrabooks and Windows 8 do not prove to be the vaunted growth drivers that
everyone hopes them to be, the demand profile for DRAM in 2013 will be markedly
different, IHS predicts.
A decline this year of 2 percent in PC shipments, for instance, would mean that
the DRAM industry remains oversupplied for the entire year, with prices falling
a much larger 29 percent than the expected 16 percent. The net result would be
a DRAM revenue decline of 7 percent to $24.6 billion—or a third consecutive
year of contraction for the industry since 2010.
A number of supply-side factors also are expected to contribute to the rebound
of the DRAM market this year.
Among these factors are the final integration of Elpida Memory with its buyer,
Micron Technology; the continued transition to 2x-nanometer technology of
leading players Samsung Electronics and SK Hynix; and the disposition of
distressed Taiwanese producers ProMOS Technologies and Powerchip Technology.
For U.S.-based Micron, the 2012 deal in which it purchased bankrupt Elpida of
Japan will finally close sometime during the second quarter this year. This
means that starting in the middle of 2013, Elpida and its associated fab
Rexchip will move to Micron’s DRAM technology. The transition will pave the way
toward reduced output during the second half of the year, which would serve to
favorably curb persistent oversupply within the industry and strengthen
pricing, stabilizing the market overall.
In the case of Samsung and SK Hynix, the space’s most powerful DRAM producers,
both suppliers will finish 2013 with approximately 60 percent of their wafers
at a 2x-nanometer manufacturing process. The move to a more efficient
lithography will result in bit growth of 30 to 35 percent—a boon for the
players and to the industry at large.
Taiwan’s ProMOS and Powerchip, currently reeling from low revenue and high
debt, would likely have a positive impact on the industry if they found a
buyer. The net drop in DRAM production if their fabs were sold would be
minimal, but the cut in production would still help to mitigate oversupply in
the first half of the year.
Micron/Elpida integration plays major role in market’s fate
However, another risk that could derail DRAM prospects this year relates to
what Micron does after it absorbs Elpida and Rexchip. An optimistic assumption
calls for Micron to shift existing DRAM capacity from the acquired companies to
the more lucrative NAND flash memory. If this happens, DRAM production would be
reduced to the benefit of the industry, resulting in greater undersupply and
causing correspondingly stronger prices. However, the opposite would be
true—with oversupply continuing and weak prices enduring—if Micron elects to
not allocate DRAM capacity from Elpida and Rexchip, for whatever reasons it
Given the notoriously volatile nature of the industry, DRAM revenue prospects
remain highly susceptible to both internal and external forces in 2013, IHS
believes. A great deal rests on the verdict on Ultrabooks, Windows 8 and
PCs—and on Micron’s capacity allocation decisions for the rest of the industry.
For more information, please contact:
Senior Manager, Editorial
Direct: + 1 408 654 1714
Mobile: + 408 921 3754
IHS Media Relations
+1 303 305 8021
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