Electronics Production | May 12, 2009

Micron Back in DRAM Top Ranking

Reports of Micron Technology Inc.’s demise in the global DRAM market have been greatly exaggerated, with the company managing to return to the Top-3 rank in the first quarter, according to a preliminary estimate from iSuppli Corp.
Micron of the United States in the first quarter increased its share of global DRAM revenue to 14.6 percent, up from 13.8 percent in the fourth quarter, and up from 11.3 percent from the first quarter of 2008. The rise back to third place represents an impressive comeback from the company’s recent low point in the first quarter of 2006, when it dropped to the fourth rank in the DRAM market. Micron in the first quarter surpassed Elpida to take the third rank.
Micron’s DRAM resurgence could upset the applecart in the DRAM market.

“Micron’s comeback poses a risk to the health of the DRAM industry and threatens the leading players in the market,” said Nam Hyung Kim, director and chief analyst, memory ICs, for iSuppli. “Until 2003, the company had been a solid No. 2 behind Samsung but had seen its share decline due to its effort to diversify its product line beyond DRAM and its lateness to invest in 300mm fabs. Micron now has renewed its competitive vigor, mainly due to its acquisition of a 300mm fab from Inotera in Taiwan. Micron’s resurgence could trigger a DRAM market share war—which would drive prices down and adversely impact industry profitability in the future.”

Whatever the impact on the market, Micron is likely to continue its advance in the coming quarters. “iSuppli believes that Micron inevitably will gain market share with additional fab access in the future,” Kim said. “However, Micron’s success in acquiring a bigger piece of the market will depend on how quickly the Inotera fab converts from Qimonda’s old process technology to Micron’s stacked technology. This is something that will requires additional major investments before full production is achieved.”

DRAM disaster continues in Q1
The DRAM industry continues to suffer from overproduction and excess inventories that are causing prices and revenues to drop.

Global DRAM revenue in the first quarter declined by 20.1 percent compared to the fourth quarter and by 44.1 percent from the first three months of 2008. The DRAM per-megabyte Average Selling Price (ASP) in the first quarter declined by 8 percent and shipments of megabyte units dropped by 13 percent compared to the fourth quarter.
In contrast, megabyte unit shipments grew 10 percent in the first quarter of 2009 compared to the same period in 2008, indicating that more production cuts are needed to accelerate market recovery during this worldwide recession.

Cutting the losses
Micron in the first quarter managed to outperform the market and gain share by limiting its revenue decline to 15.4 percent compared to the fourth quarter. In fact, all the Top-10 DRAM makers suffered sequential declines in revenue, except for Nanya, which actually mustered a 2.7 percent increase.
However, Nanya’s growth was a result of the comparison with its underperformance in the fourth quarter. Furthermore Qimonda’s move to stop all DRAM production helped Nanya to enter the Top-5 rank.
Samsung also posted a strong performance by containing its revenue decline to 8.4 percent in the first quarter. This gave Samsung a market share of 34.3 percent in the first quarter, a record high for the South Korean electronics giant.
Taiwanese suppliers, Powerchip and ProMOS, suffered substantial sales declines. In the case of Powerchip, its sales contracted 85 percent compared to the same quarter last year.

iSuppli Table: Preliminary Ranking of Top-10 DRAM suppliers in Q1 2009 (Ranking by Revenue in Millions of U.S. Dollars)

Source: iSuppli Corp. May 2009
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