PORTLAND, Ore. — The dynamic random access memory (DRAM) market is back in the black and rising fast, recording its highest profits in nearly three years, according to IHS. DRAM operating margins rose 27 percent in the most recently reported period (April to June 2013) up from 11 percent in the first quarter -- the highest level since 2010 (see figure below). In fact, IHS notes that operating margins have been steadily climbing for six quarters.
After years of PCs dominating DRAM sales, they consumed less than 50 percent of manufactured DRAMs in 2012 for the first time in 30 years, according to IHS. In this post-PC era, many devices -- especially mobile -- are using less DRAM per unit, which is slowing the overall growth of the market.
After a three-year slump the DRAM business is finally posting rising average selling prices equal to those of three years ago, adding to operating margins rises for six successive periods.
(Source: IHS iSuppli)
Dee Robinson, IHS senior analyst, memory and storage, told EE Times:
In terms of both revenue and gigabyte, the DRAM market is still expanding, but the growth is slowing because for the new market segments that DRAM is falling into, particularly mobile, the densities are lower so gigabyte growth is going to be lower than during the PC era. The growth in mobile is making up for the shrinking of the PC market, but nothing like the 50-to-90 percent growth rates of the past. Going forward, what we're expecting is that growth rates will be pretty moderate for DRAM -- in the 20-to-30 percent range.
To keep margins healthy in this post-PC era, suppliers have had to tighten their belts and refrain from the over-production woes that depressed average selling prices (ASPs) in 2011 and 2012 when they sometimes dropped by nearly one-third in a single quarter. That effort is now paying off, as ASPs rose 4 percent in the first quarter of 2013 and a whopping 12 percent in the second quarter of 2013, according to IHS.
"Due to industry consolidation behind three major players -- Samsung, SK Hynix, and Micron, which owns Elipida -- they are better able to coordinate production, bringing stability to a market going through a major transition away from PCs," says Robinson.
Operating margins, which were boosted by the rising ASPs, were highest for SK Hynix (33 percent) followed by Elpida Memory (32 percent), Samsung (28 percent), Inotera (27 percent), and Micron (12 percent), according to IHS.