Lower prices to hurt DRAM vendors this year

Lower DRAM prices could benefit consumers, who can pack more memory into PCs.

A huge decline in memory prices could hurt DRAM vendors this year, with overall revenue projected to decline by 11.8 percent in 2011, research firm IHS iSuppli said in a study released Wednesday.

Worldwide DRAM revenue this year will be US$35.5 billion, a drop from $40.3 billion last year, IHS iSuppli said. The decline is in sharp contrast to the 77.5 percent DRAM revenue increase in 2010 compared to 2009.

DRAM is the main form of memory used in laptops, PCs and other devices. DRAM prices started declining in the third quarter last year, and the trend could continue this year, said Mike Howard, senior analyst for DRAM and memory at IHS iSuppli.

The drop in DRAM prices will benefit consumers though, who will be able to pack more memory into PCs, Howard said. The price of a 2GB memory module is half the price it was last year, he said.

The spot price of a 2GB DDR3 module was $1.67, according to DRAMexchange, a website that tracks memory prices.

In a December study, DRAMexchange said that DRAM prices in December had declined by 50 percent from its peak last year, and could bottom during the first quarter of 2011.

Howard also attributed the DRAM price drop to a decline in PC shipments. Even though DRAM inventory is healthy, the decline in PC shipments has hurt DRAM sales. After an explosion in the first two quarters last year, PC shipments worldwide have been lower than expected due to economic uncertainty.

Many new PCs now shipping include the newer DDR3 form of memory. Samsung last week announced it had developed a next-generation DDR4 module using the 30-nanometer class process technology. DDR4 memory is twice as fast as DDR3, and consumes half the energy.

Howard also said there could be a new lease of life for DRAM in smartphones and tablets, whose shipments will exceed PCs by more than 50 million units in 2011. Memory content in those devices continue to increase, which could help DRAM revenue, Howard said. Mobile DRAM will account for 16.5 percent of all DRAM bits by 2014, an increase from 6.2 percent in 2009.

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Agam Shah

IDG News Service
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