IC Insights has revealed that DRAM average selling prices (ASPs) have increased every month throughout 2013 and are now at levels last seen in October 2010. On a quarterly basis, the DRAM ASP jumped an estimated 42 per cent in 2Q13 compared to the same period in 2012. The increase followed a 22 per cent rise in 1Q13. The market research company predicted that the DRAM ASP will grow to $2.53 in 3Q13, 50 per cent greater than in 3Q12, and then taper slightly to $2.52 in 4Q13, which would represent a 46 per cent increase compared to 4Q12.

The increase in DRAM ASP has not come as a complete surprise. One factor contributing to rising prices is the fact that fewer suppliers are participating in the DRAM market today compared to 2010. Micron is (still) expected to complete its acquisition of Elpida Memory and two prominent Taiwan IC suppliers (Powerchip and ProMOS) have essentially exited the commodity DRAM business. Consequently, shipments of DRAM are in the hands of (and more tightly controlled by) fewer suppliers.

Meanwhile, several years of greatly reduced capital expenditures in the DRAM market have resulted in little new capacity being added. DRAM capital spending as a per cent of sales has declined from 31 per cent in 2011, to 19 per cent in 2012, to a forecasted 12 per cent in 2013. With little new capacity being added, the supply-demand balance is now favoring DRAM suppliers as demand (particularly for higher-priced mobile DRAM) is beginning to outstrip supply, resulting in upward pressure on prices.

Third, the computer industry is undergoing a major transition to mobile computing. Shipments of smartphones and tablets are increasing rapidly while shipments of traditional notebook and desktop PCs are falling. Most DRAM suppliers have changed their product mix to meet the needs of the growing mobile market. DRAM suppliers have scaled back their output of lower-priced commodity PC DRAM and transitioned to higher-priced, low-power, mobile DRAM. Even though DRAM unit shipments are forecast to fall eight per cent in 2013, the DRAM ASP is expected to jump 40 per cent for the year. After DRAM market declines of 25 per cent in 2011 and 11 per cent in 2012, IC Insights estimated the volatile DRAM market to grow 28 per cent in 2013.

By: DocMemory
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