DRAMeXchange, a division of TrendForce, reports that the global sales revenue of DRAM modules for 2016 totaled US$6.9 billion, amounting to a decline of about 12% compared with the result of the previous year. The depressed PC DRAM prices during the first half of 2016 and the continuing contraction of the DIY market were the main factors behind the revenue drop.
DRAMeXchange points out that the DRAM market was still in oversupply during the first half of 2016 with the ASP of 4GB PC DRAM modules hitting a low of US$12.5. After the second quarter of 2016, the surge in mobile DRAM demand began to have an impact on the supply of DRAM products for other applications. It was then that the PC DRAM market finally started to see tightening supply and rising prices.
And even though PC DRAM rode on the price uptrend for the rest of 2016, its average contract price for the entire year plunged by 34% compared with 2015. The global average spot price suffered even steeper drop. Consequently, the module industry took a major hit in revenue with most suppliers posting declines in their annual results. As most module makers tried to keep their revenues from falling further, a few were able to grow their revenues against the market headwinds by finding opportunities in the blue ocean market segments.
Kingston topped the 2016 revenue ranking with a global market share exceeding 70%
A few large module makers continued to dominate the market in 2016 and were more secure in their positions. The first top five module houses in the top 10 ranking took 87% of the global revenue market share. They together with the last five module houses in the top 10 ranking accounted for 93% of the year’s total revenue.
Kingston again held on to first place because the company increased its shipment share in the contract market for PC DRAM and benefitted from its expanded DRAM product lines. Even though the average contract price of DRAM again fell more than 30% annually in 2016, Kingston was able to persevere with just a 6.7% drop in its total DRAM module revenue for the year. Already having a sizable market share for eMCPs used by the second-tier Chinese smartphone makers, Kingston aims to increase eMCP sales to the first-tier Chinese smartphone makers in 2017. Also, Kingston has been selling specialty DRAM products in the consumer electronics market since 2016, and this also started to generate significant revenue this year.
Ramaxel was the revenue leader among Chinese module houses while ADATA was the revenue leader among the Taiwan-based suppliers
Ramaxel was still the revenue leader among the Chinese module houses in 2016 and took third place in the year’s global ranking. Ramaxel posted a steep annual revenue decline at 39% due to the weak PC DRAM market in the year’s first half. However, Ramaxel has a chance to turn around and grow its revenue in the future as the company can count on its relationship with Lenovo. Furthermore, Ramaxel will be adding new eMCP products into its portfolio and expanding the share of server DRAM modules in its product mix.
ADATA was one of the few module houses that registered revenue growth for 2016 and was still the revenue leader among Taiwanese suppliers. ADATA gained a cost advantage over its competitors during the second half of 2016 as it raised the share of gaming products in its product mix and kept its own DRAM inventory at an optimal level.
In recent years, DRAM module makers have searched for blue ocean opportunities as to offset the revenue decline caused by the shrinkage of the PC DRAM spot market. In the case of Kingston, the company focused on the smartphone market in 2015 and also became very active in the specialty DRAM market in 2016. Taiwan-based ADATA and Team Group on the other hand had made inroads into the gaming market. As for China’s Ramaxel, it has locked onto the server DRAM market. Other module makers are going to follow the similar strategy, which is to establish a strong foothold in various niche application markets as the competition becomes more heated.