SAN FRANCISCO—The global DRAM industry is expected to partially reverse massive losses incurred in 2011, with projected growth of more than 3 percent this year, according to market research firm IHS iSuppli.
IHS (El Segundo, Calif.) said the projected growth is anticipated because of the exit of Japan's Elpida Memory Inc., which filed for bankruptcy protection in February. Following an auction process, U.S. memory chip vendor Micron Technology Inc. is now in discussions with Elpida's trustees about acquiring the company's assets. Though Micron has reportedly promised to keep at least one Elpida fab open if it acquires the firm, many believe that Micron may shutter some of Elpida's capacity or convert it to NAND flash production.
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, IHS said.
"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," said Mike Howard, senior principal analyst for DRAM and memory research at IHS, in a statement.
Global DRAM revenue this year is forecast to reach $30.6 billion in 2012, up 3.3 percent from $29.6 billion in 2011, according to IHS. Though the projected growth is seemingly modest, it's a welcome development after DRAM sales contracted by 25 percent last year, IHS said.
According to the IHS forecast, DRAM revenue will exceed $30 billion each year for the next five years, reaching $40.2 billion in 2016. According to IHS, this would represent an unprecedented run for the DRAM industry.
"This year’s anticipated turnaround comes as somewhat of a surprise, especially as the challenges of 2011 appeared to point to a calamitous 2012," Howard said.
According to Howard, weak demand was a major problem for DRAM last year. But the main problem for DRAM in 2011 was excess capacity—an issue that has dogged DRAM for much of its history, Howard said.
Extrapolating from the old to the new is natural but dangerous these days. For sure PCs need DRAM but tablets and smartphones are so far not as big a driver. Iphone and Ipad do not even use 1 GB. The new consideration for these devices is power consumption, where DRAM is a big contributor with much less value added compared to storage.