Elpida story and balanced sup/demand to
enable 2012 DRAM market, as per IHS
According to the IHS iSuppli DRAM market tracker report,
the market for DRAM is expected to partially reverse the
drastic losses it incurred in 2011 and achieve revenue growth
this year. It' s the result of balanced supply and demand
following the exit of major manufacturer Elpida Memory Inc.,
Below is the further analysis from IHS:
Global DRAM industry revenue this year is forecast to reach
$30.6 billion, up 3.3 percent from $29.6 billion in 2011.
Although seemingly small, the revenue expansion for 2012
is a welcome development given the stunning 25 percent contraction
last year. The overall picture will continue to brighten
during the next few years, as shown in the figure below,
with DRAM revenue exceeding $30 billion each year for the
next five years and reaching $40.2 billion in 2016-an unprecedented
run scaling unparalleled heights for the market.
"This year's anticipated turnaround comes as somewhat
of a surprise, especially as the challenges of 2011 appeared
to point to a calamitous 2012," said Mike Howard, senior
principal analyst for DRAM & memory research at IHS.
"Weak demand was one of the major challenges last year,
when revenue slipped each quarter as prices went from bad
to worse. However, the key problem was excess DRAM manufacturing
capacity-the same trouble that has bedeviled the industry
for much of its history."
Compounding the difficulties last year were the October
floods in Thailand, which depressed PC shipments-a traditional
DRAM stronghold. The perceived scarcity of hard disk drives
pummeled PC sales and thereby DRAM demand; and the paucity
of hard drives meant PC manufacturers were paying more for
storage-leaving even fewer dollars to spend on DRAM.
When bankruptcy is a good thing
DRAM prospects started looking better, however, after the
bankruptcy filing in February of Japan's Elpida. Elpida
was part of the elite echelon of DRAM manufacturers that
includes Samsung Electronics Co. Ltd. and Hynix Semiconductor
Inc. of South Korea, as well as U.S.-based Micron Technology
Inc.
"Elpida's insolvency will have a massive impact on
the industry's fortunes, primarily because it promises to
shift the market from a state of endemic oversupply to sorely
needed balance for most of 2012," Howard said. "As
a result of such developments, IHS is now cautiously optimistic
that the DRAM industry may actually be through the downturn
and headed for improvement."
Even with the final outcome of Elpida's bankruptcy uncertain
and the disposition of its assets still in negotiation,
the rest of the industry is expected to benefit from Elpida's
exit, with the market lifting on signs of supply rebalance.
Moreover, no significant deterioration is expected within
the global economic environment, which should help reverse
the paucity of demand that has hobbled the industry of late.
DRAM space to improve through the years
The DRAM space can look forward to continued strong expansion
in the next few years because of three powerful growth drivers:
ultrathin PCs, smartphones and tablets.
Ultrathin PCs-a category that includes Intel Corp.'s ultrabooks,
the MacBook Air from Apple Inc. and ARM-based lightweight
PCs-will present plenty of new opportunities for low-power
DRAM, especially when ultrathins comprise the majority of
shipments by 2016. For high-end ultrabooks in particular,
PC manufacturers are projected to have enough margin to
afford the installation of low-power double data rate 3
(LPDDR3) DRAM in their products, adding to overall DRAM
industry revenue. LPDDR3 will account for as much as 19
percent of the total DRAM market in 2014.
In the case of smartphones, increasing shipments during
the next five years coupled with growing memory content
per phone suggest rosy prospects as well for DRAM. Average
DRAM content in smartphones this year will amount to 5.1
gigabits, up from 3.5 gigabits last year and from 2.3 gigabits
in 2010.
Overall, the net increase in DRAM due to smartphones will
equate to a compound annual growth rate (CAGR) of 65 percent
from 2011 to 2016.
Very rapid growth is also forecast for DRAM in tablets,
with average DRAM content in 2012 for the devices projected
to hit 8.0 gigabits, up from 4.5 gigabits last year and
2.5 gigabits in 2010. When tablet shipment increases are
combined with DRAM content growth, DRAM use in tablets will
be up a substantial 95 percent CAGR for the same five-year
period from 2011 to 2016, accompanying smartphones and ultrathins
in boosting total DRAM revenue.
Author: Srinivasa Reddy N
