Longtime industry leader Samsung expanded its share by 3.5 percentage points to garner an impressive 45.0 percent slice of DRAM market revenue in the third quarter, the highest portion of the market that the company has ever taken on a quarterly basis. While Samsung’s DRAM revenue declined by 8.9 percent compared to the second quarter, the company still handily outperformed the industry as a whole, allowing it to expand its lead over the other suppliers, as presented in the table below.
“Samsung perennially has the DRAM industry’s largest capital expenditure budget, allowing it to reduce costs and offer advanced products more quickly than the competition,” said Mike Howard, principal analyst for DRAM and memory at IHS. “Because of this, the company was better able to absorb the decline in average selling prices (ASP) in the third quarter, which fell 26 percent for the DRAM industry as a whole. Samsung’s ASP fell just 17 percent during the quarter, while its shipments increased 9 percent, helping it to outperform the industry. With these advantages, the South Korean electronics giant was able to expand its DRAM market leadership to the highest margin in company history.”
Samsung’s share of DRAM market revenue has been rising steadily in recent years, growing from 28 percent in 2007 to 30 percent in 2008, to 34 percent in 2009 and 37 percent in 2010.
The 26 percent ASP decrease for the overall DRAM market in the third quarter compares to an average quarterly decline of 2 percent since the beginning of 2009. The extraordinarily weak pricing caused DRAM industry revenue in the third quarter to decline by 15.8 percent to $6.8 billion, down from $8.1 billion in the second quarter.
“DRAM demand in the third quarter was undercut by anemic sales of PCs—which represent the primary market for the memory type,” Howard noted. “The consumer appetite for PCs has been dampened by weak economic conditions combined with competition from media tablet devices.”
U.S.-based Micron Technology Inc. posted an even better performance than Samsung in the third quarter.
Micron’s revenue declined by only 3.8 percent sequentially in the third quarter. As a result, the company’s share of market revenue increased to 12.1 percent, up from 10.6 percent in the second quarter.
This put fourth-place Micron within a hair’s breadth of third-place Elpida Memory Inc. of Japan, which saw its share decline to 12.1 percent, down from 14.6 percent, on revenue of $823 million. Elpida’s shipments were up 16 percent in the third quarter, but its ASP plummeted a steep 39 percent. The rising yen also made the Elpida manufacturing facility in Japan appear relatively expensive compared to production sites in other countries.
Like Elpida, second-place Hynix Semiconductor Inc. of South Korea suffered a loss of market share in the third quarter. With revenue of $1.5 billion, Hynix had 21.5 percent share, down from 23.4 percent. The company’s ASP fell faster than the industry average, sinking 29 percent during the period.
Another supplier to suffer a market share decrease was fifth-place Nanya Technology Corp. of Taiwan, down to 3.6 percent market share from 4.7 percent—a significant drop largely driven by the supplier’s relatively weak ASP, which fell 32 percent. Nanya’s shipment growth of 7 percent also was slightly lower than the industry average of 13 percent. Nanya continues to be heavily exposed to the commodity DRAM market and will find the next few quarters an uphill climb, especially as this segment is expected to remain in a slightly oversupplied position.
The Wind at Winbond’s Back
Rounding out the Top 8 were Winbond Electronics Corp., one of the few market share gainers along with Samsung and Micron, in sixth place; ProMOS Technologies Inc., down to less than 1 percent share; in seventh place; and Powerchip Technology Corp., rebounding after not shipping any branded DRAM in the second quarter, in eighth. All three companies are based in Taiwan.