Market Watch

Mobile DRAM Enjoys Massive Q3 as Shipments Surge


Market booms, thanks to smartphones and tablets; Samsung falters

The third quarter was a blockbuster period for the mobile dynamic random access memory (DRAM) market as industry manufacturers rushed to produce memory chips for tablets and smartphones in time for the holidays, but not every supplier fared equally well, according to an IHS iSuppli DRAM Dynamics brief from information and analytics provider IHS.

Global shipments of mobile DRAM climbed an outsized 37 percent sequentially during the third quarter—the best performance for the space in two years. Growth during the eight prior quarters had ranged from a low of -3 percent to a high of 24 percent. But until now, no period had come close to equaling the 46 percent surge seen by the mobile DRAM market for shipments, which took place in the third quarter of 2010. 

The magnitude of expansion during the third quarter this year was such that mobile DRAM has enlarged its share of the overall DRAM market, which also includes other DRAM sectors such as PC, server, consumer and graphics DRAM. Mobile DRAM grew to make up 24 percent of the entire DRAM space, up from 15 percent a year ago. And to reach the 24 percent level, mobile DRAM shipments had to rise a staggering 37 percent on the quarter.

That growth easily dwarfs DRAM industry prospects as a whole, which is expected to raise its shipments 28 percent for the entire year. As such, the much higher leap of mobile DRAM over the course of a shorter comparative period—quarterly vs. annual—makes its feat that much more impressive.

Mobile DRAM shipments are tightly coupled with the shipments of smartphones, and increasingly, of tablets—two favorites among the purchasing public that continue to outperform other electronic devices. In particular, the recent release of new smartphones and tablets has spurred heavy consumer interest, affecting the build ahead for mobile DRAM suppliers in the time leading up to the holiday sales season.

The middle of the year used to be the time when mobile DRAM shipments grew the most—likely in anticipation of the seasonal sales uptick that occurred in the second half of every year. However, peak growth in the mobile DRAM market has shifted in the last few years toward the end of each year, very likely due to increased dependence on the holiday sales season as well as to shorter supply chains, IHS iSuppli believes.

Samsung dips, competitors rise

The third-quarter bounty did not extend to all players equally.

Samsung Electronics saw its share of mobile DRAM sales decline to 58 percent, down from 62 percent, even though sales rose from $1.13 billion to $1.24 billion. Samsung’s shipments rose only 26 percent during the quarter, while the overall market posted a 37 percent increase.

In comparison, SK Hynix and Elpida Memory enjoyed far better numbers, growing their mobile DRAM shipments by 46 percent and 64 percent, respectively. Average selling prices for both companies, however, were lower than those of Samsung, which helped to mitigate the damage that Samsung incurred from its own more feeble shipment figures. SK Hynix currently has a 23 percent sales share of the mobile DRAM market and is at second place; Elpida, with a 15 percent share, is in third.

The fourth-ranked player, Micron Technology, saw its sales share slip to 3 percent, down from 4 percent—a victim of shipment growth below the industry standard during the period, and of a higher-than-average decline in its prices.

The dip in Samsung’s share was especially intriguing, given that it was expected to have maintained at least 60 percent of the mobile DRAM market. Falling below that threshold is now giving rise to questions on whether Samsung might be encountering challenges with its “compete and supply” strategy—in which the electronics giant competes with, as well as supplies to, its customers, like Apple.

Still, the ongoing dominance by Samsung was expected. And as the PC market continues to struggle, mobile DRAM—not its long-suffering counterpart in the other DRAM segments—has now become the DRAM sector to watch.

Read More >> Mobile DRAM Market Booms in Q3, Samsung Slips