Three Trends Make DRAM Maintain Shortage

DRAM manufacturers can put down their hearts. Global DRAM industries will maintain its positive result in next few years, despite the uncertainty of PC market. After DRAM manufacturers reduced in 2012, DRAM market began to stabilize. Recently, Micron finished the acquisition of Elpida, better benefiting the maturity of 43-year DRAM industry.

Three development trends lead to shortage
First, Intel is cutting its impact on DRAM market. Two years away, Intel controlled more than 90% of CPU supply, which in-depth affected the supply and demand of DRAM. But with the emergency of ARM and the high-speed development of mobile devices, the absolute control of CPU supply by Intel was broke up. When CPU is no longer a bottleneck, DRAM market ushers in its market growth.

Second, market is expanding demand for DRAM. Driven by mobile equipment, unlike NAND only connects cloud, DRAM is available to levels of network equipment and terminal products. According to data, 5 years ago, PC and notebook accounted for 80% DRAM of total volumes; but the figure declined to 50% two years ago, and is expected to lower than 30% this year. This demand decline mainly comes from the significant growth (20 times growth in the past twenty years) of mobile DRAM used in mobile communication equipment, consumer electronics, smart home appliances and servers. Heading into the future, since the mobile internet revolution has started, there will more new mobile products, largely backing the DRAM demand.

Third: DRAM slows down capacity expansion. This seems contradictory with the increasing demand. The reason: DRAM encounters technology bottleneck. Comparing with NAND Flash, the industry has started the research of 10nm technology; but DRAM is still in 20nm. As such, manufacturers are reluctant to invest 12-inch plants with one generation technology, but are awaiting 18-inch factory. One 12-inch plant investment is high of $6 billion, make return a problem; but 18-inch factories may come out in 2018, so four years of stagnation will cause capacity gap.

Major battlefield moves to mobile devices
Overall, DRAM mainly includes three markets: traditional PC; mobile equipment and dedicated DRAM (tailored for high-performance products in specific areas). Recently, the main battlefield of DRAM is from PC turning to mobile devices, transforming the previous oversupply, price competition to shortage.