With a huge drop in ASP predicted for 2011, global DRAM revenues are expected to contract sharply this year despite strong growth opportunities in smartphones and tablets.
Worldwide DRAM revenues are forecast to decline to US$35.5 billion in 2011, down 11.8% from US$40.3 billion in 2010. The double-digit drop represents a stark reversal of the 77.5% increase in DRAM revenues in 2010 compared to 2009. The next several years after 2011 also will be turbulent for DRAM revenues, as revenue heads down in the face of ever-declining ASPs.
"After the boom year of 2010, the DRAM market is waking up to 2011 with a hangover," said Mike Howard, senior analyst for DRAM and memory at IHS. "With supply exceeding demand, pricing will decline precipitously for the year, causing revenue to decrease."
Prospects for DRAM - the main memory in game consoles and desktop and laptop PCs - took a sudden turn for the worse in the third quarter of 2010 after ASPs plunged, ending five straight quarters of steady increases. Given the robust channel inventories of that time, stronger bit growth and a retreat in demand primarily in notebooks, the market changed direction abruptly and fell more severely than anticipated, ending the DRAM rally.
The reversal of fortune will extend to 2011. The ASP this year is projected to fall 44.7% to US$1.44, down from US$2.61 in 2010. Bit growth, while expected to increase 59.6% to 24.6 billion gigabytes (GB), will not make up for the brutal contraction in prices.
"While bad news for suppliers, the retreat in the DRAM ASP augurs well for consumers," Howard said. "The price of a 2GB module currently is less than half its level six months ago, a development sure to lead to higher DRAM content in PCs for 2011 and provide consumers with more memory per machine. Furthermore, the new predominant memory configuration in 2011 will be 4GB, to be loaded in half of all desktop PCs, with 2GB systems declining to just 6% of the total market by the end of the year."
Consumers also can expect the DRAM market to increasingly transition to newer DDR3 modules, which boast faster transfer speeds and consume less power than older DDR2 device types. While DDR2 will continue to be found in many consumer electronics devices such as TVs, nearly all PCs shipped in 2011 will ship with DDR3.
While using less memory per device, smartphones and tablets in 2011 will combine to outship PCs by more than 50 million units, making them categories well worth watching.
Memory content for smartphones in 2011 will increase at a substantial rate of 62%, nearly doubling the 33% growth projected in PCs. For their part, tablet shipments will grow rapidly this year to 57 million units, compared to 16 million in 2010 - and then become a significant DRAM category rivaling smartphones in 2012 and 2013.
The growth in smartphones and tablets will drive strong demand for mobile DRAM in the years to come, IHS iSuppli said. By 2014, mobile DRAM will account for 16.5% of all DRAM bits that are shipped - a dramatic increase from just 6.2% in 2009, according to the firm.