Computer Memory Manufacturing
Date July 2020
- The dynamic random-access memory (DRAM) market is expected to decline 2.4 percent year-over-year in 2020, reflecting strong demand from cloud service providers for server DRAM, offset by weak demand and falling prices from the smartphone market.
- Solid-state drives (SSDs) using NAND flash storage, which is a nonvolatile storage that does not require power to retain data, are the current standard for laptops and other mobile devices and are being adopted in other industries, such as automotive and data center.
- NAND flash revenue is forecast to grow 40 percent in 2020 due to shortages persisting from late 2019, with prices expected to decrease 9.4 percent in the second half of 2020 following a 15.7-percent increase in the first half of the year.
By the numbers
computer memory types and outlook: Computer memory consists primarily of DRAM and NAND flash. DRAM is used for temporary storage in personal computers (PCs), servers and mobile devices. NAND flash is used for permanent storage in mobile devices. NAND has largely replaced hard drives in PCs and servers in the form of SSDs due to its significantly faster access speed. The majority of these types of products are bought and sold in the secondary market for a relatively high percentage of cost.
In terms of revenue performance, NAND flash revenue is forecast to grow 40 percent in 2020 due to significant shortages persisting from late 2019, with prices expected to decrease 9.4 percent in the second half of 2020 following a 15.7-percent increase in the first half of the year, based on reporting by global research and advisory firm Gartner. The firm also expects the DRAM market to decrease in 2020, albeit at a slower rate of 2.4 percent over 2019. This decline reflects the strong demand from cloud service providers for server DRAM, offset by weak demand and falling prices from the smartphone market.
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 both price and availability. Prices and values decrease when availability is high. When availability is scarce, prices and values stabilize and can sometimes even increase.
Although average selling prices increased in early 2020, industry revenue decreased due to DRAM shipment disruptions caused by COVID-19-resultant logistic disruptions.
SSD Market growth: Solid-state drives (SSDs) using NAND flash storage, which is a nonvolatile storage that does not require power to retain data, are the current standard for laptops and other mobile devices and are being adopted in other industries, such as automotive and data center.
The SSD market exceeded $55 billion in 2019 and is estimated to grow at an approximate 15-percent compound average growth rate between 2020 and 2026, based on research from global market research and management consulting company Global Market Insights. Driving market demand will be the proliferation of cloud computing platforms for both personal and enterprise use.
Also increasing demand is the growth of SSD adoption in the automotive industry for next-generation connected cars. SSDs deliver high-performance storage and reliability in several in-vehicle applications including driver-assist technology, entertainment systems, navigation systems, and 3D mapping.
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, re-flow ovens, and automated optical inspection 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.
Note: This publication is provided for informational marketing purposes only. The material contained herein should not be regarded as advice, nor relied upon to make financial, operational or other decisions; nor should it be used as a substitute for an asset appraisal. Actual recovery values may vary from transaction to transaction and the recovery values referenced herein are for representative transactions without regard to specific key factors. This material may be redistributed only in its entirety, including notice of copyright. All rights reserved. ©2020 Gordon Brothers, LLC.
Reference sources: gartner, gadgets now, IBISWorld, trendforce, global market insights