computer memory

Computer Memory Manufacturing

Industry Insight

Date July 2019

Projected Values - Computer Memory

 

Current Trends

  • The dynamic random-access memory (DRAM) market is expected to decrease 22% year-over-year in 2019 after two years of increasing prices due to low demand and pricing competition
  • Server memory is the source of highest demand and is expected to account for 50% of DRAM production by 2023, compared to 28% in 2018
  • Flash storage is the new standard, and the trend of replacing spinning disks with solid state drives (SSD) will continue, though falling memory prices are expected to result in all-time low SSD pricing
  • Oversupply in the NAND Flash market continues as demand for end products such as notebooks, smartphones, and servers remains weak, resulting in average NAND pricing falling by as much as half

 

By the numbers

Synopsis

 

Types of computer memory: Computer memory consists primarily of DRAM 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 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 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. DRAM market revenue grew 30 percent in 2018 compared to 2017 but is expected to fall 22 percent in 2019. Some DRAM manufacturers are reducing production capacity as a result of high inventories.
 

Solid-State Drive prices decreasing, driving adoption rate: Oversupply in the NAND Flash market has resulted in falling prices for SSDs, which in turn is driving demand. DigiTimes noted that pricing fell approximately 10 percent in the first quarter of 2019, with the average unit price for 512GB SSDs being equal to that of 256GB SSDs of one year ago, with pricing expected to continue to drop. The global SSD adoption rate in the notebook market exceeded 50 percent in 2018, and is expected to reach 65 percent by the end of 2019. With pricing down, demand for SSDs has increased. According to International Data Corporation estimates, a total of 60.2 million SSDs were shipped in the first quarter of 2019, representing a 21 percent increase over 2018.
 

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 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.