Excess capacity once again is set to plague the DRAM market, according to a new report from IHS iSuppli. Worldwide DRAM revenue in 2011 is forecast to decline to US$35.5 billion, down 11.8% from US$40.3 billion in 2010 as ASP’s decline rapidly on the back of the supply glut. According to the market research firm, revenue will decline each year through 2013. The ASP is projected to drop 44.7% to US$1.44, down from US$2.61 in 2010.
“After the boom year of 2010, the DRAM market is waking up to 2011 with a hangover,” said Mike Howard, senior analyst for DRAM and memory at IHS. “With supply exceeding demand, pricing will decline precipitously for the year, causing revenue to decrease.”
The market research firm noted that a ASP’s turned down in the third quarter of 2010 as a retreat in demand primarily in notebook PCs started. High inventory in the channel also helped to push prices lower, ending the DRAM rally.
Bit growth, while expected to increase 59.6 percent to 24.6 billion GB, will not make up for the brutal contraction in prices, noted Howard.
“While bad news for suppliers, the retreat in the DRAM ASP augurs well for consumers,” added Howard. “The price of a 2GB module currently is less than half its level six months ago, a development sure to lead to higher DRAM content in PCs for 2011 and provide consumers with more memory per machine. Furthermore, the new predominant memory configuration in 2011 will be 4GB, to be loaded in half of all desktop PCs, with 2GB systems declining to just 6% of the total market by the end of the year.”
However, memory content for smart phones in 2011 will increase by 62%, nearly doubling the growth projected in PC’s of 33%. The popular tablet format is expected to see shipments increase to 57 million units, compared to 16 million in 2010—and then become a significant DRAM category rivalling smart phones in 2012 and 2013.
The market research firm noted that by 2014, mobile DRAM will account for 16.5% of all DRAM bits that are shipped, up from only 6.2% in 2009.