Following a revenue low in the first quarter of 2009 not seen since 2001, the DRAM industry ended the fourth quarter at US$8.7 billion, up a mighty 43% from US$6.1 billion in the earlier quarter, according to iSuppli. Such an outcome was enough to qualify the period in consideration as among the top-5 quarters of the last decade.
"The DRAM industry in 2009 was one of extremes," said Mike Howard, iSuppli senior analyst for DRAM. "After dropping to revenue levels unseen in more than seven years, the DRAM market improved steadily throughout the year and finished strong at the end of 2009."
The DRAM industry also realized a positive net income margin of 15% in the fourth quarter - the first after 10 consecutive quarters of negative net income dating back to the first quarter of 2007, Howard indicated. A number of factors accounted for the happy turnaround, including increased bit shipments and higher ASP. And with improving demand-style supply dynamics, DRAM pricing in the intermediate term appears to herald rosy prospects ahead for the industry and augur profitability.
The outstanding revenue performance of DRAM in the fourth quarter was driven largely by a firm pricing environment, in which DRAM ASP reached US$2.66, a 20% increase from US$2.21 in the third quarter, iSuppli said. While this is a substantial quarterly gain, a more dramatic comparison can be drawn to equivalent levels in the fourth quarter of 2008. Compared to the ASP during that period of US$1.71, the ASP in the final quarter of 2009 represented a huge 55% increase.
"Even if the ASP deteriorated continuously this year - which iSuppli is forecasting - prices essentially will be flat compared to year-ago levels as they come off from such a peak," Howard observed.
DDR3, which transfers at twice the data rate of its DDR2 predecessor, accounted for 35% of bit shipments in the fourth quarter, according to iSuppli. In comparison, the older DDR2 still commanded 48% of the market during the period but is on a ceaseless decline. Starting the first quarter of 2010, the two will swap places, and DDR3 will account for the lion's share of DRAM bit shipments, the research firm believes.
A key factor that will keep DDR3 pricing above that of DDR2 for much of 2010 is the high demand profile of DDR3, iSuppli said. "The roadmap of Intel clearly points to a DDR3 future," said Howard. "Already, all of the company's Nehalem-based chips run DDR3, and a DDR3-only Atom processor is also in imminent release."
Prices for the two DRAM technologies will be kept close as major manufacturers shift production between DDR3 and DDR2 in order to optimize revenue, according to iSuppli.