Mixed Results for Memory in 2014 and 2015

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Despite posting its second consecutive year of double-digit growth in 2014, the global memory microchip market experienced a major slowdown in the key NAND flash segment. The low rate of NAND flash memory revenue growth is expected to continue in 2015, contributing to a deceleration of the overall memory market for the year.

The global memory market amounted to $82.5 billion in 2014, up 17 percent from $70.5 billion in 2013, according to the market research firm IHS Inc. This strong performance follows a 28 percent expansion in 2013. And market growth is expected to slow dramatically in 2015, with revenue expanding by less than 6 percent.

The largest memory segment, DRAM, held steady in 2013 and 2014, with strong growth of about 32 percent for both years. In contrast, NAND—the runner up to DRAM in terms of sales—experienced a major swing in its growth, dropping to a 6 percent expansion in 2014, down from impressive 36 percent growth in 2013.

NAND sales in 2014 were affected by a weakening expansion in smartphone shipments and a sharp slowdown in the rate of tablet growth. The uneven performance of the different memory segments had a divergent impact on various semiconductor suppliers that derive a major portion of their revenue from sales of NAND compared to those dependent on DRAM.

Japan's Toshiba Corp., whose only memory activity is in NAND flash, suffered a 5 percent decline in overall semiconductor revenue in 2014. The company’s performance was also impacted by the poor results of its consumer electronics chip business.

In contrast, SK Hynix of South Korea stood out with a 26 percent increase in overall semiconductor revenue, the largest growth percentage among the Top 10 chip suppliers in 2014. The company benefitted from the strong performance of the DRAM segment, with 80 percent of its semiconductor revenue generated by that product.

In a similar fashion, U.S. memory supplier Micron Technology Inc. attained a 14 percent increase in revenue. The company earned 70 percent of that revenue from DRAM.

This year, NAND flash memory will continue its slow pace of growth, with revenue expected to rise by a moderate 7 percent. Meanwhile, DRAM’s revenue expansion will come back to earth, with growth slowing to about 6 percent.

The slowing of both of the major segments of the memory business will cause overall memory market revenue growth to decelerate as well. For the various players in the memory market this is likely to result in more uniform results for DRAM and NAND specialists.

Overall, the DRAM segment has stabilized somewhat when compared to the volatility of years past. The PC market has experienced a decline in growth. With PCs formerly dominating DRAM demand, sales have diversified. Meanwhile, the number of DRAM suppliers has decreased. This has led to a somewhat better balance of supply and demand in the DRAM segment. 

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