Are DRAM producers rigging the market?

With only three major producers, the DRAM market is vulnerable to manipulation, and the correlation between bit growth and ASP in recent years suggest that producers are trying to walk a fine line between the interests of their shareholders and the interests of their customers.

In the 34-year period from 1978-2012, the DRAM price-per-bit declined by an average annual rate of 33%, points out IC Insights.

However, from 2012 through 2017, the average DRAM price-per-bit decline was only 3% per year.

Moreover, the 47% full-year 2017 jump in the price-per-bit of DRAM was the largest annual increase since 1978, surpassing the previous high of 45% registered 30 years ago in 1988!

The DRAM market declined 8% in 2016 only to grow 77% in 2017, says IC Insights. In 2017, DRAM bit volume growth was 20%, half the 40% rate of increase registered in 2016.

For 2018, each of the three major DRAM producers (e.g., Samsung, Hynix, and Micron) have stated that they expect DRAM bit volume growth to once again be about 20%.

However, as shown in Figure 1, monthly year-over-year DRAM bit volume growth averaged only 13% over the nine-month period of May 2017 through January 2018.

Figure 1 also plots the monthly price-per-Gb of DRAM from January of 2017 through January of 2018. As shown, the DRAM price-per-Gb has been on a steep rise, with prices being 47% higher in January 2018 as compared to one year earlier in January 2017.

There is little doubt that electronic system manufacturers are currently scrambling to adjust and adapt to the skyrocketing cost of memory, says IC Insights.

 

 

As shown in Figure 1, the correlation coefficient between the DRAM price-per-bit and the year-over-year bit volume increase from January 2017 through January 2018 was a strong -0.88 (a perfect correlation between two factors moving in the opposite direction would be -1.0).

Thus, while system manufacturers are not scaling back DRAM usage in systems currently shipping, there have been numerous rumors of some smartphone producers scaling back DRAM in next-generation models (i.e., incorporating 4GB of DRAM per smartphone instead of 5GB).

In 2018, IC Insights believes that the major DRAM suppliers will be walking a fine line between making their shareholders even happier than they are right now and further alienating their customer base.

If, and it is a BIG if, the startup Chinese DRAM producers can field a competitive product over the next couple of years, DRAM users could flock to these new suppliers in an attempt to get out from under the crushing price increases now being thrust upon them—with the “payback” to the current major DRAM suppliers being severe.

 


Comments

17 comments

  1. Ha Ha Ha Fred, absolutely brilliant, the Koreans must be shaking in their shoes

  2. Yes indeed Mike ‘ship the shit’ as a great semiconductor man once said.

  3. Very droll, Mike. Mind you I’ve seen purchasing managers take pleasure in explaining to their superiors why they’ve chosen an out of house part in preference to a, in their opinion, shite in-house made part.

    • Indeed so. I expect that’s a problem all the Harman Industries audio companies now have since Samsung bought Harman as Samsung was always right up there with ST on the ‘avoid at all costs’ list 🙂

  4. They came from IC Insights, Keith – Bill McLean..

  5. Well Yes Mike, everyone expects them to be shite but, if they aren’t, as Bill says, everyone’s going to use them to give the Big 3 a kick in the goolies for ripping them off these last two years.

  6. It could be 1985 all over again, Fred, when the Japanese came in and wiped out all the US DRAM producers except TI and Micron but, I agree with you, it’s more likely to be a gradual replacement of foreign DRAM with older tech domestic DRAM for a good many years yet. We’ll see.

  7. Yes indeed Fred, the Chinese can’t come in too soon.

    • Yes, and their biggest market for DRAM and Flash is their own home market, don’t forget. So, all the new Fabs presumably have to produce “something”, has to be good enough but doesn’t need bleeding edge technology for now, save that for later…

      • Yes but that ‘home market’ is predominantly making iPhones and Galaxy 9s, neither of whom are going to touch Chinese DRAMs with a bargepole, even those destined for Chinese consumers.

        There was a documentary about Chinese builders last summer and it showed how the best paid ones always saved up for DeWalt tools as a status symbol.

  8. > Are DRAM producers rigging the market?
    Reminds me of that old song “I just wonder, did you ever – all the time”

  9. I thought the leading players have gone from 30nm in 2012 to 15nm now, Keith.

    • Have you got any pointers to where you get those figures from David? And whether that’s for the core cells or the periphery logic?

  10. “In the 34-year period from 1978-2012, the DRAM price-per-bit declined by an average annual rate of 33%, points out IC Insights.

    However, from 2012 through 2017, the average DRAM price-per-bit decline was only 3% per year.”

    Is this not because scaling in DRAM is pretty much dead now?

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