Date August 2017
By the numbers
- DRAM average selling prices increased 54% from April 2016 to February 2017
- Mobile and server memory remain areas of long-term growth
- Memory currently generates 15.8% of semiconductor and circuit manufacturing industry revenue and has increased its share of revenue over the past five years as the prevalence and diversity of memory products have expanded
Types of computer memory: Computer memory consists primarily of DRAM (dynamic random-access memory) and NAND Flash. DRAM is used for temporary storage in PCs, servers, and mobile devices. NAND Flash is used for permanent storage in mobile devices. NAND is increasingly replacing hard drives in PCs and servers in the form of solid-state drives (“SSDs”) due to its significantly faster access speed. The majority of these types of products are commonly bought and sold in the secondary market for a relatively high percentage of cost.
Prices historically volatile: In the past, the markets for commodity DRAM, and to a slightly lesser extent NAND Flash, have been extremely volatile because of the commoditized nature of these products and fluctuations in demand. Typically, there is little differentiation between one manufacturer’s product and the next, resulting in competition in price and availability. Prices and values decrease when availability is high. When availability is scarce, prices and values stabilize and can sometimes even increase. The DRAM market has experienced a significant increase over the past 16 months; revenue is forecasted at $57.3 billion for 2017, a 39 percent increase over 2016. DRAM average selling prices are expected to continue increasing for the next six months, though probably not as rapidly as they did over the past 16 months.
Solid-state drive prices increasing: Prices of solid-state drives used for data storage in personal computers and servers climbed for a 14th consecutive month recently, with SSD prices increasing approximately 20 percent since the start of 2017. Shortages of NAND flash storage chips, the key components in SSDs, are expected to continue through 2018 due to the increased demand in smartphones, tablets, and SSDs. SSDs are expected to stay at current price levels with only slight fluctuations until late 2018 or into early 2019.
Equipment is valuable: Manufacturers of DRAM and NAND Flash chips represent a subset of the semiconductor industry. The secondary market of semiconductor tools is significant, though the majority of DRAM and NAND Flash chip manufacturing is performed in Asia. Module manufacturing consists of printed circuit board assembly (“PCBA”) lines, which typically include screen printers, high speed chip placement machines, reflow ovens, and automated optical inspection (“AOI”) stations. PCBA lines are commonly found in U.S. electronics manufacturing. The useful life of PCBA equipment is long, with a strong market for legacy equipment in developing countries.