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DRAM and NAND Flash Consumption in China to Reach US$12 Billion and $6.67 Billion Respectively in 2015 as Domestic Demand Grows, TrendForce Says

15 October 2015 Semiconductors Sean Yang / Avril Wu

According to the latest research from DRAMeXchange, a division of TrendForce, server and smartphone shipment demand continues to grow in the immense Chinese memory market. The latest forecast indicates that China will consume US$12 billion worth of DRAM and US$6.67 billion worth of NAND Flash in 2015. These figures represent 21.6% and 29.1% of the global DRAM and NAND Flash industries’ total revenues for the year, respectively.

Domestic DRAM and NAND flash consumption is increasing with the rise of Chinese brands

“Increasing shipments of Chinese branded PCs and smartphones in recent years have contributed to the overall DRAM demand,” said Avril Wu, assistant vice president at DRAMeXchange. “China’s top PC maker Lenovo and the global PC market leader HP are neck on neck on shipments, and this is an indication that the Chinese brand vendors’ purchasing power in the DRAM market is getting stronger every year.”

The rise of Chinese brands is even more apparent in the smartphone scene. TrendForce’s smartphone shipment report for the third quarter of this year shows seven of the world’s top ten smartphone vendors hail from China. Chinese smartphone vendors also consume greater amount of memory as majority of them produce Android devices, which require more mobile DRAM than Apple’s iOS devices. Furthermore, the rapid growth of the Internet of Things in recent years has stimulated the demand growth of servers in China. The country has already consumed nearly 20% of the world’s server DRAM supply this year. Clearly, China’s economic growth is closely tied to the DRAM industry.

In the NAND Flash market, demand growth is strong in various related applications as the 15nm and 16nm processes have become the industry’s mainstream technologies and the development of 3D-NAND Flash is advancing rapidly. The SSD application currently leads in NAND Flash demand, and the penetration of SSDs in notebooks is also climbing rapidly. Another demand driver comes from smartphone eMMCs, which have seen a sharp increase in their densities as well.

China has become a focus for smartphone, tablet and notebook vendors. Apple in particular has been adding retail locations in the region and localizing designs of their products for Chinese consumers over the past two years. Likewise, Chinese smartphone vendors have greatly increased their presence in the overseas markets, with some brands producing higher-specification devices than their international competitors. As a result, China’s NAND Flash consumption is quickly rising.

Backed by the government, China’s memory industry shows enormous potential

China has ambitious plans for its memory industries, which can have huge growth potentials if the government provides the necessary strategic investments. Though Korea, Japan and the U.S. are ahead in development, they are no match for China when it comes to the strength of domestic demand.

Hoping to secure state funding, numerous industry-related organizations in China have proposed plans to manufacture memory products domestically. While obtaining cutting-edge technologies is important, it is not the top priority for the Chinese memory makers. The first step for them is to have the capabilities to design, produce and sell their own products. This means that the industry participants in the upstream will be able to develop technologies in house and sell their products to downstream markets, creating a vertically integrated supply chain within China. As industry clusters form, memory manufacturing will be less likely to go offshore and the entire semiconductor sector will be on the path to sustainable development.

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