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TrendForce:DRAM Industry Undergoes Production Cuts and Adjustments, 2012 Worldwide Revenues Slide

29 August 2013 Semiconductors Avril Wu

According to DRAMeXchange, a research division of TrendForce, due to the memory price drops and the shrinking spot market, the 2012 global module revenues reached $US 5.5 billion, a 13% decrease from 2011's $US 6.3 billion. The top five module manufacturers account for approximately 75% of the market's total revenue, whereas the top ten represent 90%. While Kingston is still sitting comfortably at the top of the list, its revenues have slid by an estimated 12%. Ramaxel and Smart Modular, which are in second and third place, respectively, saw their revenues dip 14% and 3%. TrendForce believes that the sliding revenue figures do not represent weakened competitiveness, but rather a shift of focus towards new product lines. The entire module industry, as such, is expected to be a lot more diversified and varied in the future.

On the whole, 2012 could be said to be a particularly difficult year for the DRAM market; the PC shipments had declined by nearly 6% compared to the year before, whereas the DDR3 2Gb price tumbled from a high of $US 1.17 to $US 0.82, a 30% decrease. Various major events—for instance, Micron's decision in May to merge with Elpida—also impacted the entire industry considerably. Luckily, with the growing success of the smartphone and tablet businesses, an increasing number of first tier DRAM manufacturers have switched their attention from PC DRAM to mobile DRAM, causing the supplies of the former to shrink noticeably in 2H12 and the Q4 DRAM prices to rise. However, due to the three quarters' worth of price drops experienced by the DRAM industry, the gradually shrinking spot market, and the diversification of the module manufacturers' product lines (which no longer made DRAM a major source of revenue), the 2012 module revenue figures still turned out to be relatively weak.   

While Kingston still holds the top spot in the 2012 rankings, its declining status in the channel market is no longer disputed. At present, nearly 70% of the company's revenues are derived from PC-OEMs. Its mobile eMCP product, on the other hand, is still only perceived to be a work in progress. Ramaxel, whose status benefited significantly from the rising shipments of its largest client, Lenovo, saw only a 14% drop in revenue in 2012. For Smart Modular, given the improving state of its foundry business and the progresses made in the South American market, the company’s revenue decreased by only 2% last year, allowing it to rise to the third spot. Looking over to the Taiwanese module manufacturers, A-DATA's position has slid from the third to fourth spot following the changes implemented in its product mix, but still managed to become the most successful module maker in Taiwan. Transcend ended up being the only DRAM manufacturer in 2012 to actually show positive revenue growth, thanks to the sales of its industry standard memory products.  

Looking at 2013, with Micron officially merging with Elpida, and with Taiwanese DRAM manufacturers either exiting the market altogether or resorting to the foundry business route, it's safe to say that the DRAM market has officially transformed into an oligopoly. A good number of major challenges, henceforth, can be expected on the supply side. Given that the spot market is gradually becoming smaller and that Ultralike products are stimulating demand for on-board chip solutions, advancements in the area of DRAM storage capacity are also expected to be limited. Other than strengthening their relationship with PC-OEMs, more and more first tier manufacturers will be seeking to enter into the highly profitable industry-based and military-grade SSD markets. Such course of action will lead to increased Flash production ratio and ensure survival in a market that is becoming increasingly more diverse.

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