Electronics Production | May 21, 2012
DRAM share of smartphone BOM falls
DRAM’s share of the total cost of these advanced cellphones has actually fallen by more than half in the course of a year, mainly due to a decline in its price, according to an IHS iSuppli DRAM Market Brief from information and analytics provider IHS.
Smartphone dissections conducted by IHS reveal that DRAM’s share of the cost of the total bill of materials (BOM) of a smartphone declined to 6.3 percent in the first quarter, down 7.1 percentage points from 13.4 percent during the same time last year. DRAM’s share of the BOM in the first quarter of 2012 amounted to $11.81, compared to $19.48 a year ago. The share of DRAM in the total cost of smartphone BOMs first slipped to single-digit territory in the second quarter last year to 8.5 percent, and the cost percentage has remained in the 6 percent range since then, as shown in the figure attached. The sample of smartphones in the teardown included 19 devices, and only smartphones that included discrete DRAMs were considered in an effort to maintain consistency in comparison. “Larger demands are being placed on the processing power of smartphones, in the process blurring the line between a phone and a computing device,” said Dee Nguyen, memory analyst for IHS. “As this has happened, DRAM has become an increasingly crucial component of the handset supply chain. The growing importance of DRAM, however, appears not to be correspondingly reflected in the total BOM cost of a smartphone given the memory’s declining share.” The lower share of the BOM has occurred even though DRAM content has risen in smartphones, from 256 megabytes in the first quarter of 2010 to 800 megabytes during the first quarter this year. The primary reason for the falling share of DRAM in smartphone BOM cost is DRAM pricing. With so many players entering the DRAM business as PC fortunes dwindle and DRAM suppliers shift focus to the mobile market, mobile DRAM prices have dropped. For instance, the contract price of a 2-gigabit Low-Power Double Data Rate 2 (LPDDR2) DRAM tumbled 17 percent in the fourth quarter last year, with pricing expected to continue coming down this year. Average selling price as a whole retreated 48 percent last year to $1.34 1-gigabit-equivalent units, down from $2.59 in 2010. There is hope, however, that DRAM’s share of the BOM cost of a smartphone won’t continue to slide in the future. “Because of the extensive application processing requirements of the modern smartphone, handset manufacturers can throttle DRAM loading by only so much before risking lower performance,” Nguyen said. “As a result, handset manufacturers will have little choice but to continue moving up the DRAM technology and density curve, which could then enable the memory to take a greater share of total smartphone BOM costs.” A switch to next-generation DRAM technology could also help stem the downslide. Although LPDDR3 is waiting in the wings for the next phase of technology migration, it is expected to hit the ground running and achieve an adoption rate that should outpace the currently dominant LPDDR2. Only a small portion of smartphones will ship with LPDDR3 this year, but increased implementation of the product—which will carry a price premium—will push DRAM’s share of the smartphone BOM cost higher in 2013. All told, the near-term rise in demand placed on memory bandwidth by new processors, as well as the imminent transition of the market to LPDDR3, will work to help stop the continuing decline of DRAM in the BOM cost share of smartphones, IHS believes.
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