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Memory Chip Industry Struggles


Buyers have the upper hand in price negotiations for DRAM because of oversupply, weak demand, and stiff competition, according to researcher DRAMeXchange.

Because of sluggish demand, both contract and spot market prices for 4 gigabyte (GB) DRAM modules have fallen to historic lows. The average 4 GB module price declined 1.54 percent to $16 due to oversupply and weak demand. The average price for a 2 GB DRAM module was mostly steady at $9.25 in October.

DRAM chip prices are approaching or have reached cash cost, according to DRAMeXchange.

Prices have fallen because of overall weak PC demand and the migration to smaller process geometries in DRAM manufacturing, which has resulted in more usable chips per wafer.

Currently, 30 nm process technology is used by DRAM leaders Samsung and SK Hynix, but there is a transition occurring to 20 nm technology. Samsung’s 20 nm technology is being used mostly for the production of server and mobile memory. Commodity DRAM output on the 40 nm and 30 nm processes will continue.

DRAM bit supply growth is expected to be about 19 percent, which is significantly lower than it has been in recent years, DRAMeXchange reported.

Meanwhile, declining prices for NAND flash memory means the flash memory market will decline 4.7 percent to $24.3 billion in 2012, according to researcher IHS. The NAND segment this year will account for $20.8 billion and the NOR sector will total $3.5 billion.

The good news for flash memory manufacturers is business will bounce back in 2013 as revenue rises 11.4 percent. Growth will continue through 2016 when flash revenue will total $33.3 billion, the researcher reported.

That growth will be driven by mobile handsets. NAND is used in high-end handsets such as smart phones, while NOR is used in lower-end products.

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