Memory chip makers haven't had much reason to celebrate in a long, long time, and while it's way premature to go popping the champagne bottles, there's at least a glimmer of hope. According to inSpectrum, the DRAM spot market witnessed all mainstream DDR3 chip prices jump by 10 percent, pushing the price of 2Gb (gigabit, not gigabyte) to $2.03.
inSpectrum says the much needed price hike in the spot market was the combined result of low inventory levels and improving market sentiment. After the Chinese New Year holidays, inSpectrum expects pricing to stay strong, and most leading DRAM makers seem intent on avoiding any more price drops.
There's more good news. Market research firm iSuppli says "DRAM shipments for tablets are expected to explode by a factor of more than nine this year." If iSuppli's crystal ball is working correctly, DRAM shipments this year for tablet devices will climb to 353.3 gigabits, up a whopping 834.7 percent from just 37.8 million in 2010.
With memory prices continuing to decline, OCZ has made the decision to duck out of the DRAM market completely and focus its attention on solid state drives, the company said as part of its fiscal 2011 third-quarter announcement.
"In August 2010, the Company announced a strategic optimization of its memory products whereby it discontinued certain unprofitable commodity memory module products with the intent to continue only with certain high-performance memory products," OCZ said. "However, since that time, there has been well-chronicled, continued weakness in the global DRAM markets.
"Having balanced this DRAM market weakness against the capital needs of the Company's growing SSD products, the board has determined that it is in the best interests of the stockholders to accelerate plans to discontinue its remaining DRAM module products by the end of its current fiscal year of February 28, 2011."
On one hand, the announcement's a little surprising, considering OCZ helped pioneer the enthusiast memory sector. But the move is also understandable given the sorry state of the DRAM market. Maybe OCZ saw the writing on the wall a long time ago, as evidenced by its robust product portfolio. Long gone are the days where OCZ only served up memory, and now the company kicks out SSDs, flash drives, cooling products, power supplies, peripherals, and even do-it-yourself notebook kits.
Things have already gone from bad to worse to downright despairing, and unfortunately for DRAM makers, relief is no where in sight. Just when you thought things may have hit rock bottom, market research firm iSuppli says there's going to be a "huge drop in average selling prices" for 2011.
"After the boom year of 2010, the DRAM market is waking up to 2011 with a hangover," said Mike Howard, senior analyst for DRAM and memory at IHS. "With supply exceeding demand, pricing will decline precipitously for the year, causing revenue to decrease."
A hangover might be putting it nicely. According to iSuppli's figures, worldwide DRAM revenue in 2011 will drop to $35.5 billion, representing an 11.8 percent slide from $40.3 billion in 2010, and will continue to drop through at least 2013.
"While bad news for suppliers, the retreat in the DRAM ASP augurs well for consumers," Howard said. "The price of a 2GB module currently is less than half its level six months ago, a development sure to lead to higher DRAM content in PCs for 2011 and provide consumers with more memory per machine. Furthermore, the new predominant memory configuration in 2011 will be 4GB, to be loaded in half of all desktops PCs, with 2GB systems declining to just 6 percent of the total market by the end of the year."
If there's a bright spot for DRAM makers, it's the mobile market. According to iSuppli, smartphones and tablets in 2011 will combine to outship PCs by more than 50 million units. Both of these sectors will help slow the bleeding.
DRAM pricing continues to free fall to new lows, declining yet again in December and plummeting to their lowest point of the year, according to data by market research firm iSuppli.
"DRAM prices in general have been affected by soft PC demand -- especially during the first half of 2010 -- as well as by greater supply of commodity memory following a solid increase in bit shipments during the second half," said Mike Howard, principal analyst for DRAM and memory at iSuppli. "That lethal combination of falling demand and growing supply has coalesced to place a great deal of pressure on DRAM ASPs."
By the second week of December, the contract price for a 2GB DDR3 module was only $21, more than 50 percent below the $44.40 price point of just six months ago. The same trend applies to DDR2 modules, which dropped from $33.80 in June to $21.50 in December.
The good thing about hitting rock bottom is that there's no where to go but up, right? That might be the case, but the DRAM market has yet to completely bottom out. According to Howard, there's absolutely nothing to stop prices from plunging even further during the next six months.
It's the same old song and tune for the DRAM market, which continues to sing the blues over falling chip prices. How bad is it? According to market research firm iSuppli, "DRAM continued to head down a grim path of unstoppable decline in December." Yikes.
It's the lowest point of the year for DRAM makers, who had plenty of low points in 2010. By the second week in December, the contract price for a 2GB DDR3 DRAM module was only $21, down more than half of the $44.40 selling price just six months ago. And it's not just DDR3; DDR2 modules are suffering the same kind of price drops.
"DRAM pricing appears to be reaching critical levels, and nothing is likely to stop prices from continuing their slide in the next six months," iSuppli says. "In particular, as DDR3 reaches $1 per gigabyte, DRAM manufacturers operating at the 60-nanometer (nm) process node will start to face the painful economics of costs exceeding prices. In 2008 when prices dropped below $1 per gigabyte, manufacturers with lagging process technology were forced to throttle down production."
Things don't look to improve for DRAM makers through at least the first half of 2011. On the flip side, PC makers have been able to load up machines with more RAM without jacking up the price.
Samsung this week unveiled what it claims is the industry's first monolithic four gigabit (Gb), low power double-data rate 2 (LPDDR2) DRAM built on a 30nm manufacturing process. The new chip is specifically intended for high-end smartphones and tablets
"The mobile device market is gaining momentum with the advent of tablet PCs, which is adding significantly to the already surging smartphone segment," said Jun-Young Jeon, vice president, memory product planning team, Samsung Electronics. "Samsung will work closely with mobile device designers to bring high-performance, high-density mobile solutions to market as rapidly as possible."
According to Samsung, its new LPDDR2 part can transfer up to 1,066Mbps, offering similar performance to desktop memory. It's also more than twice as fast as previous mobile DRAM technology.
Samsung said it will begin sampling 8Gb (1GB) LPDDR2 DRAM this month by stacking two 4Gb chips in a single package, whereas previous 8Gb LPDDR2 DRAM used four 2Gb chips. The upshot here is a 20 percent height reduction, which should help result in slimmer mobile devices, and 25 percent less power consumption.
We're starting to sound like a broken record here, but that's only because the DRAM market keeps playing the same old tune over and over again. It's a sad melody about falling DRAM contract prices, and according to Digitimes, those prices plummeted another 12-13 percent in late November.
Contract prices for 2GB DDR3 modules have tumbled to $22, and they're not selling for that much more online. A quick glance on Newegg shows several 2GB DDR3 sticks going for less than $30 shipped, some as low as $24 shipped.
Citing un-named industry sources in Taiwan, DigiTimes says the recent price drop has to do with an oversupply caused in large part by Samsung, Inotera, and Nanya kicking out too many modules. By the end of 2010, there's the chance contract prices will fall even further, below the $20 mark.
The way things are going, we'd rather run a lemonade stand than try to make a buck selling RAM. The DRAM market continues to struggle, but in an attempt to turn lemons into lemonade, PNY has teamed up with Sony to offer a bonus full-length movie download with the purchase of one of PNY's new memory kits.
The new kits include 8GB and 4GB capacities in both 1333MHz desktop and 1066MHz notebook configurations. PNY says the 8GB kit is now the highest capacity memory in the company's line-up, which sells for $130 direct through PNY, and little less street.
As for the bonus flick, buyers can choose from "over 35 movie titles from a broad selection of genres... The bonus Sony movie downloads include recent blockbuster hits as well as favorite classics, such as The Da Vinci Code, Hitch, Big Daddy, As Good As It Gets, 21, and S.W.A.T."
We've been extensively following the ups and downs (mostly downs) of the DRAM market, and that's one business we're glad we're not a part of. Back in late 2008, A-DATA chairman Simon Chen said the DRAM market was the worst it has been in 15 years, and things haven't gotten a whole lot better since then.
Making the best of a bad situation, Samsung in the third quarter of 2010 became the only Top 5 DRAM supplier to achieve revenue growth, positioning itself as the dominant chip maker, market research firm iSuppli said. Samsung sold $4.4 billion worth of DRAM in the third quarter, up 14.3 percent from $3.8 billion in the second. Here's how it breaks down for everyone else:
Hynix: $2.24 billion Q3/ $2.31 billion Q2
Elpida: 1.73 billion Q3 / $1.91 billion Q2
Micron: $1.12 billion Q3 / $1.14 billion Q2
Nanya: $439 million Q3 / $473 million Q2
"Samsung has been vocal about its desire to expand its DRAM market share to as high as 50 percent," said Mike Howard, senior analyst for iSuppli. "The third-quarter results show Samsung has put its money where its mouth is. By investing heavily in expanding product and advancing its manufacturing technology, the company has been able to cut pricing and to eat into the market share of its competitors."
Samsung increased its market share from 35.4 percent in Q2 to 40.7 percent in Q3 and is on track to reach its goal in 2011.
We took a peek at Newegg and found that the lowest priced 6GB kit of RAM is less than a hundred bucks (barely), and that includes shipping. That's pretty incredibly, and perhaps even a little sickening for anyone who may have forked over several hundred dollars for a high-end 2GB kit of standard DDR back in the day. Thankfully, memory prices have fallen steeply since then, particularly in the last couple of years when the market seemingly bottomed out. Well guess what? Lower prices are yet to come.
According to market research firm inSpectrum, prices of mainstream DRAM chips posted a big sequential drop in the contract market for the first half of October. This, inSpectrum says, is indicative of slow demand among all the major OEMs, noting that a true price bottom has yet to come.
Mainstream 2GB DDR3 modules averaged $30.70 (contract price) in the first half of October, a 10 percent sequential drop. Meanwhile, 2GB DDR2 modules dropped 5 percent to settle in at $32.
That's bad news for memory makers who have seen prices drop for the past several months. In the second half of July, for example, 2GB DDR3 modules were going for $43.1 (contract price). At some point, pricing will level out and perhaps even begin to rise again, but for now anyway, it appears you're safe to put off that memory upgrade.