Mobile DRAM market surges in 2011 as smart phone, tablet sales boom

EL SEGUNDO, USA: The market for mobile dynamic random access memory (DRAM) is set for stratospheric 71 percent growth this year, defying a slowdown in overall DRAM sales, according to new IHS iSuppli research.

2011 mobile DRAM shipments are projected to reach 2.9 billion gigabits (Gb), up from 1.7 billion Gb in 2010. Growth will continue during the following years, with shipments reaching 20.5 billion Gb in 2015, up by a factor of 12 from the total in 2010, as shown in the figure.Source: IHS iSuppli, USA.

Mobile DRAM is a specialized variety of DRAM that incorporates advanced power management features.

“In contrast with the weakening performance of the overall DRAM market, growth in mobile DRAM is surging, thanks to the ongoing proliferation of smart phones on the one hand, and to an increasing public appetite for newly popular tablets like Apple Inc.’s iPad on the other,” said Mike Howard, principal analyst for DRAM and memory at IHS. “As these mobile devices handle more data-intensive applications, demand is expected to escalate for mobile DRAM.”

Smart phones in 2014 will consume 36 times more DRAM than they did in 2009, IHS iSuppli research indicates.

Mobile DRAM also will receive a big shot in the arm thanks to tablets, which will consume 3.5 billion Gb by 2014, up from 35 million Gb in 2010—an increase of 100 times.

Such growth in demand, although representing a tremendous boon for mobile DRAM makers, nonetheless will contribute to commoditizing the product and will spur a gradual decline in margins, IHS believes.

The changing face of the business
Mobile DRAM long has been a very attractive product segment for DRAM vendors. Generally produced based on known demand levels, pricing is mostly driven by cost reductions—not by the wild fluctuations of supply and demand more typical of commodity DRAM. Such a production philosophy is the complete opposite of speculative manufacturing or building a product without known demand, a common practice in the PC DRAM market.

The growth of mobile DRAM, however, has prompted nearly every DRAM maker to roll out a mobile DRAM product. As competition mounts, the long-held practice of manufacturing mobile DRAM in volumes based on known demand will change, IHS believes, altering the face of the business and how it is run.

Third parties like Kingston Technology Corp., for instance, will concentrate on just a few product configurations at very competitive pricing, leading to a shift away from elaborate customization toward lower-priced standardized products.

Companies also are developing more memory options that support a leaner, less complex ecosystem. Should a large maker of a computer’s central processing unit (CPU)—such as Intel Corp. or Advanced Micro Devices Inc. (AMD)—decide to launch a product that supports mobile DRAM, that manufacturer likely would support only a few standardized products in order to cut down on costs and trim redundancies.

Overall, both a rise in the number of mobile DRAM makers as well as greater product standardization point to the likelihood of increased commoditization for the segment. And though commoditization may take two to three years to unfold, the first indications should become apparent by the end of the current year, Howard said.

Source: IHS iSuppli, USA.