Memory Markets in the Post-PC Era

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The memory microchip business once was flooded with competitors, dominated by a single product —DRAM — and driven by one major application — the personal computer (PC). However, with the arrival of the post-PC era, when the personal computer is no longer driving technology markets, the memory market has had to find a new sense of stability. With greater diversity in demand for products and in end markets, a more stable growth pattern is expected for the memory industry, leaving behind the boom-and-bust cycles that tend to have characterized the industry in the past.

Worldwide memory market revenue is expected to total $90 billion in 2019, rising by a scant 1.7 percent compound annual growth rate (CAGR) from $83 billion in 2014, according to market research firm IHS Technology. Annual revenue changes will remain in a relatively tight range during the period from 2014 through 2019, varying from growth of 6 percent this year to a decline of 3 percent expected in 2016.

Source: IHS Technology

This outlook represents remarkable steadiness for a market that frequently experienced double-digit swings in the past. The fate of the DRAM business was closely tied to the PC business. Shifts in PC demand and memory supply led to wild swings in DRAM pricing, profitability and market revenue.

For example, the memory market boomed in 2010 as DRAM revenue surged by an astounding 77.5 percent. More recently, in 2011 and 2012, the memory market was weighed down by sharp declines in DRAM revenue as a slowdown in PC sales depressed demand.

However, in 2013, market conditions shifted, as DRAM manufacturing and production capacity declined. The number of DRAM suppliers had decreased, bringing an end to the hypercompetitive market conditions that previously led to product oversupply. With PC sales decreasing over the past two years, demand for DRAM has become more diverse, with smartphones and tablets accounting for a greater percentage of sales.

IHS estimated that nearly 65 percent of all DRAM bit shipments were used in PCs in 2003. However, that total fell to 50 percent in 2013, and was projected to have declined to 40 percent by the end of 2014.

At the same time, with the decline of the PC market, DRAM no longer drives overall memory revenue growth as it did in the past.

While DRAM is still the largest single segment of the memory market, NAND flash—which is used for data storage in tablets and smartphones among other applications—is projected to be the fastest-growing product through 2019. NAND flash memory revenue will increase at a CAGR of 3.1 from 2014 through 2019, compared to 1.2 percent for DRAM.

Outside of NAND and DRAM, growth prospects for other types of memory products are decidedly more circumscribed. Revenue for SRAM, NOR-type flash and other memory types is expected to decline from 2014 through 2019 as flash and DRAM cut into the sales of these devices.

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