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Electronics Production | January 14, 2011

DRAM market to see double-digit decline in 2011

With a huge drop in average selling prices (ASP) predicted for 2011, global dynamic random access memory (DRAM) revenue is expected to contract sharply this year despite strong growth opportunities in smart phones and tablets, according to new IHS iSuppli research.
Worldwide DRAM revenue in 2011 is forecast to decline to USD 35.5 billion, down 11.8% from USD 40.3 billion in 2010. The double-digit drop represents a stark reversal of the 77.5% increase in DRAM revenue in 2010 compared to 2009. The next several years after 2011 also will be turbulent for DRAM revenue, as revenue heads down in the face of ever-declining ASPs. 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 notebook PCs, the market changed direction abruptly and fell more severely than anticipated, ending the DRAM rally. The reversal of fortune will extend to 2011, according to IHS iSuppli forecasts. The ASP this year is projected to drop 44.7% to USD 1.44, down from USD 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. DRAM to find new lease on life with smart phones and tablets Mobile handsets and tablets promise to be two segments of increasing importance for DRAM companies. While using less memory per device, smart phones and tablets in 2011 will combine to outship PCs by more than 50 million units, making them categories well worth watching, IHS iSuppli research indicates. Memory content for smart phones 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 smart phones in 2012 and 2013. The growth in smart phones and tablets will drive strong demand for mobile DRAM in the years to come. 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.
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