El Segundo, Calif. Kingston Technology Co. is the top seller in the global branded third-party DRAM module market in the first half of 2007, but the strongest growth during the period were posted by smaller players Transcend Information Inc. and Ramaxel Technology Ltd., according to market researcher iSuppli Corp.
The performances of Transcend, Ramaxel, Kingston and Smart Modular outstripped that of the overall third-party branded DRAM module business in the first half, said iSuppli. Global revenue rose to $5.6 billion in the first half of 2007, up 9 percent from $5.1 billion during the same period in 2006, but results lagged those of the DRAM market itself. Global DRAM chip revenue grew by 22 percent in the first half of 2007 over the first half of 2006.
The weaker DRAM module revenue growth was due to steep price erosion, said iSuppli, which was spurred by DRAM makers' aggressive moves to expand sales of modules to OEMs. The result: Third-party module suppliers that are largely dependent on OEM sales experienced a sales drop during the first half of this year, whereas module suppliers whose product lines are diversified with more retail and flash-memory applications achieved growth and profitability during the period.
While the larger, more diversified vendors fared well during the first half, the smaller players were hit hard. For the smaller third-party DRAM module suppliers that were not ranked among the Top 10, their combined revenue declined to $2.3 billion, down 48 percent from $2.5 billion in the first half of 2006, said iSuppli.
iSuppli expects that dramatic price declines in the market will continue to challenge third-party module makers as well as DRAM suppliers. Those suppliers that are not sufficiently competitive in terms of cost, product diversification, asset turn-over and cash management are expected to post poor results in the second half of 2007, and until the end of the first half of 2008.
As for the first half of 2007, Transcend of Taiwan outperformed all DRAM module makers with a 77.3 percent increase in revenue compared to the same period in 2006, the largest increase of all suppliers, said iSuppli. Company revenue increased to $250 million, up from $141 million in the first half of 2006, in part thanks to a strong market presence in emerging regions including Eastern Europe and the Middle East. The company also bolstered its product portfolio with flash storage cards, USB flash drives and MP3 players. This resulted in Transcend climbing the rankings to the number six spot, up from number ten in the first half of 2006.
China's Ramaxel posted the second-best results, with its DRAM module revenue rising by 50.1 percent to reach $275.6 million, up from $183.5 million in the first half of 2006. The company's ranking climbed to fourth place, up from seventh in the first half of 2006. The company's increase is attributed to its diversification, selling DRAM modules as well as providing back-end assembly.
"Ramaxel is a rising star in the third-party DRAM module industry. It has managed to become more than simply a local Chinese supplier and now has emerged as an important business partner for global OEMs such as Lenovo and Hewlett-Packard Co., spurring fast revenue growth for the company," said Nam Hyung Kim, director and chief analyst, memory ICs/storage systems for iSuppli, in a statement.
Kingston in the first half held onto its leadership position in the branded third-party DRAM module market. The company solidified its domination with a 26.2 percent rise in revenue, growing to $1.1 billion in the first half of 2007, up from $853 million in the first half of 2006. Company market share rose to 19.3 percent, up from 16.7 percent in the first half of 2006.
In addition, Kingston's market share lead over No. 2 player Smart Modular Technologies Inc. rose 13 percentage points in the first half, up from 11.3 points in the first half of 2006. Smart also outperformed the market with a 29.4 percent increase in revenue compared to the first half of 2006, giving it a 6.4 percent share of revenue, up from 5.4 percent in the first half.