The biggest surprise isn't revenue numbers but an extraordinary prediction for the future of DRAM.
The PC DRAM market could grow by as much as 30% in 2013, say analysts at TrendForce’s DRAMeXchange. It’s a welcome change of pace after two years of oversupply and falling prices. Inventory reduction has played a part, as well as a reduction in the number of players, which has ultimately led to a more rational market.
The report attributes performance to not just bankruptcies and mergers and acquisitions but to existing players refocusing their manufacturing efforts on alternative memory technologies like NAND flash and even different varieties of DRAM. The result? A tightening DRAM supply that has driven prices up and prompted PC manufacturers to stock up on supplies in the event of future shortages. Still, as we enter the post-PC era and cloud-based storage becomes more dominant, the DRAM market will ultimately contract further, TrendForce suggests. “DRAM demand bit growth will decline on a gradual basis in the coming periods,” says the report. “Facing such a scenario, manufacturers' attitude towards capital investments has become more conservative. Other than the migration process investments, there do not appear to be any plans to develop new manufacturing capacity.” In other words, bigger is no longer better; for manufacturers to prosper, they need to focus on products like LPDDR3 and DDR4, that bring a distinct value add.
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Table 1: DRAM market ASP trend and revenue forecast
Don’t look for 2014 to provide quite the boost of 2013—the report forecasts a unit growth of 17.8% in 2014, but with an 11.5% drop in pricing, revenues will increase over 2013 by a mere 4.3%. Look for Samsung to remain the powerhouse manufacturer with roughly 50% market share. The number two spot may be something of a dogfight between Micron, bolstered by the Elpida acquisition, and S.K. Hynix. In particular, Micron benefited from Elpida’s mobile offerings, positioning it effectively to compete with LPDDR3 products.
Meanwhile, the NAND flash market is positioned to grow to $25.7 billion, a boost of more than 27% compared to 2012. As previously, the market will be driven by demand from the tablet, Ultrabook, and smart phone market; indeed, the 2013 global smartphone market alone should reach around 935 million units and they expect tablet unit shipments to reach around 200 million. Demand from all sectors will push bit demand up by 48.8%, although bit supply will lag somewhat at 41.4%.
Embedded memory will represent a particular strong spot, fueled in part by a tilt toward lower-end smart phones. “TrendForce believes that the rapid development of eMMC will be highly critical when it comes to pushing the growth of the NAND flash industry and strengthening the market's overall demand,” the report says. That said, they expect NAND flash vendors to remain conservative toward CAPEX and wafer expansion plans. Because of this, bit output increases will be mainly derived by technology node migration.
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Table 2: NAND flash market ASP trend and revenue forecast
As the implementation of eMMC SSDs demands high product quality as well as reliability, the output portion of 20-nm-class product is projected to remain at above 70% throughout 2013. Adoption of the newest manufacturing technology is not likely to occur until sometime during next year. Taking into account the fact that NAND flash production will be mostly constrained, 2013 annual supply bit growth is forecasted be merely 41.5%YoY.
It's all good news, but the most interesting part has nothing to do with numbers. “Given the increasing difficulties involved in advancing to the new manufacturing processes—and assuming that extreme ultraviolet (EUV) lithography technology is not formally adopted—the DRAM industry’s steady growth can be reasonably expected to continue.” No surprise there. But then it continues: “The dramatic price fluctuations that traditionally characterized the DRAM market, all in all, can be said to have officially come to the end.”
Officially come to an end? No more boom and bust cycles in DRAM? That's like saying that the stock market will remain steady forever. Do you believe that?