New Rules For DRAM

By Jim Feldhan
DRAM revenues grew by more than 30% in 2013. Average selling prices increased more than 45% as capacity constraints especially for LPDRAM, motivated the transition from 2GB density parts up to 4GB DRAM units declined by almost 10%. Revenue growth rates of more than 30% combined with a declining unit base are not new to the memory market. But 2013 was a pivotal year for DRAM.

Over the past eight years, the move toward mobility has not only changed the type of electronic devices we carry, it has dramatically transformed the chip market. Semiconductor designers and foundries have redirected their efforts from sheer performance to low power, low cost, high volume, multicore designs and thin packaging. These trends were driven by cell phones providing more features and functions, which in turn evolved into smartphones. Tablets entered the market just a few years ago, providing a new platform, which expanded the capabilities and use models beyond smartphones.

Initially the DRAM market did not benefit from this explosive market growth. Product development and capacity were highly tuned to the commodity DRAM computing segment. Early smartphone designs only incorporated a very small amount of DRAM. This was partly due to the fact that the compute requirements in a cell phone did not demand large amounts of DRAM and power budgets tended to minimize the design in quantity.

Tablets changed the rules of the game. For every tablet that cannibalized a notebook sale, the DRAM market lost 4GB of revenue. Recently we’ve seen performance capabilities dramatically increase for both tablets and smartphones. Notebooks are looking more like tablets. The market is experiencing a true convergence of computing and communication functions. As a result, system designers are providing consumers with more robust processing capabilities and the ability to perform more complex compute intensive applications.

This has reinvigorated the DRAM market. More robust processing translates into an increased need to design in larger quantities of DRAM. As a result, the leading DRAM vendors have transformed their development efforts towards the mobile market.

Low Power DRAM Bandwidth Evolution

Driving the demand for LP DRAM is the emergence of mobile devices as the primary computing platform in both emerging and developed regions. In addition to social media and video content, mobile devices are providing sophisticated gaming and desktop applications as well as new connections to the Internet of Things. Semico forecasts an increasing need to design in larger quantities of DRAM. New features such as biometrics, encryption, banking, the smart home, health and others will add to the demand for more LP DRAM. Average DRAM system memory will grow to at least 4 to 6 GB per tablet and 2 to 4 GB per smartphone over the few years.

2013 was a turning point for the DRAM market. Tablet sales exceeded the 200 million mark in 2013 and smartphones approached 1 billion units. DRAM manufacturers with proven low power designs experienced the rewards of their efforts. The market migrated from commodity DRAM to low power, mobile DRAM focusing on wide I/O and multichip packaging technologies. The decline of commodity DRAM demand and the increased focus on LP DRAM has contributed to the consolidation of the DRAM industry. The result is lower fab capital investment.

Larger volumes demanded from mobile devices created a shortage for LP DRAM that resulted in dramatically rising ASPs in 2013. DRAM vendors have not experienced price rises above 40% in the DRAM market for several years.

Moving forward, 2014 will build on these trends driving the need for continued increased memory per system. As the top three memory vendors implement more conservative investment strategies the DRAM market is expected to continue on a more stable path. In the future will we experience another year of over-capacity, falling ASPs and a cyclical drop in revenues? We won’t totally count that out, but in general the DRAM market is working under a new set of rules.

For more information on Semico’s memory forecasts, please contact [email protected]