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EL SEGUNDO, CA — The market for mobile dynamic random access memory (DRAM) is set for stratospheric 71 percent growth this year, defying a slowdown in overall DRAM sales, according to new IHS iSuppli research.
2011 mobile DRAM shipments are projected to reach 2.9 billion gigabits (Gb), up from 1.7 billion Gb in 2010. Growth will continue during the following years, with shipments reaching 20.5 billion Gb in 2015, up by a factor of 12 from the total in 2010.
Mobile DRAM is a specialized variety of DRAM that incorporates advanced power management features.
“In contrast with the weakening performance of the overall DRAM market, growth in mobile DRAM is surging, thanks to the ongoing proliferation of smart phones on the one hand, and to an increasing public appetite for newly popular tablets like Apple Inc.’s iPad on the other,” said Mike Howard, principal analyst for DRAM and memory at IHS. “As these mobile devices handle more data-intensive applications, demand is expected to escalate for mobile DRAM.” Smart phones in 2014 will consume 36 times more DRAM than they did in 2009, IHS iSuppli research indicates.
Mobile DRAM also will receive a big shot in the arm thanks to tablets, which will consume 3.5 billion Gb by 2014, up from 35 million Gb in 2010—an increase of 100 times.
Such growth in demand, although representing a tremendous boon for mobile DRAM makers, nonetheless will contribute to commoditizing the product and will spur a gradual decline in margins, IHS believes.
The changing face of the business
Mobile DRAM long has been a very attractive product segment for DRAM vendors. Generally produced based on known demand levels, pricing is mostly driven by cost reductions—not by the wild fluctuations of supply and demand more typical of commodity DRAM. Such a production philosophy is the complete opposite of speculative manufacturing or building a product without known demand, a common practice in the PC DRAM market.
The growth of mobile DRAM, however, has prompted nearly every DRAM maker to roll out a mobile DRAM product. As competition mounts, the long-held practice of manufacturing mobile DRAM in volumes based on known demand will change, IHS believes, altering the face of the business and how it is run.
Third parties like Kingston Technology Corp., for instance, will concentrate on just a few product configurations at very competitive pricing, leading to a shift away from elaborate customization toward lower-priced standardized products.
Companies also are developing more memory options that support a leaner, less complex ecosystem. Should a large maker of a computer’s central processing unit (CPU)—such as Intel Corp. or Advanced Micro Devices Inc. (AMD)—decide to launch a product that supports mobile DRAM, that manufacturer likely would support only a few standardized products in order to cut down on costs and trim redundancies.
Overall, both a rise in the number of mobile DRAM makers as well as greater product standardization point to the likelihood of increased commoditization for the segment. And though commoditization may take two to three years to unfold, the first indications should become apparent by the end of the current year, Howard said.
Learn more about the latest developments in the DRAM market and industry with Howard’s recent brief, entitled: The Impending Commoditization of Mobile DRAM:
Great Point. I wish I had an answer that would make sense. It seems like nobody wants to be the first company to take a risk and think outside the box. Innovation sometimes comes from the least likely of candidates. There needs to be some CEO and supply chain manager out there willing to step up and show some initiative.
Innovations just need not be technically, developing simple improved supply chain process by making availability of all the parts without adding many inventory in the chain for eg FedEx made an innovation just by improving logistics for which the customers were ready to pay. any thing simple can also make huge differences.
It seems mobile DRAM is getting more and more popular due to its advanced power management, at a larger memory size.
Will this mean a big change for processor maker to integrate DRAM control circuit?
Ken,
That's exactly what seems to have happened – a decade ago, everyone and their mother seemed to have at least some sort of novel-sounding supply chain idea (altogether brilliant or a twist on a old practice that passed for new). Now, the conversation and initiative seems to have stagnated. It could be like you said – this generation is pragmatically implementing past ideas, and in times of economic hardship, that may be all they can do. Or, maybe those last-generation ideas weren't sustainable and didn't work like expected, which now has created a chilling effect for others to champion a project (Would anyone admit to that? Probably not. But, I'm sure not all announced supply chain programs got high marks). It's possible, too, that people have just tired of the buzz or forums that once existed where people collectively brainstormed and expressed opinions – theoretical, if not actionable – have faded into memory. The other side of that same coin is that we (me, you and others reading this) may have become too jaded; our expectations for innovation are too high, and we're not appreciating the slow-and-steady progress that rarely makes hadlines. Admittedly, it takes a lot to wow me these days. As a journalist hardened by hearing too many false promises, I know I'm a cynic sometimes.
Speaking of which, I'll be at the Mobile World Congress this week, the huge monster mobile/telecom show in Barcelona. Top execs from Cisco, Nokia, Ericsson, Intel, Qualcomm, RIM, and other well-known companies will have their time on stage. I'll be listening pretty closely for that next big idea that may well get the electronics supply chain fired up again. I'm waiting to be wowed.
How can we think of supply chains when talking about companies such as Google? Or when talking about internet companies that don't really deliver a product.
Cloud computing is making every company reconsider the way they work, it must, somehow, relate to supply chains.
Perhaps a company can try out different forms of innovation. Currently, Wal-mart is promoting itself as an innovator in terms of making healthy foods more affordable for its customers. That may all be marketing, but it does also translate into reorganizations of the store and the endorement of Michelle Obama. According to http://www.theatlantic.com/food/archive/2011/02/the-reasons-for-walmarts-healthy-foods-initiative/70904/ there are a number of innovations involved.
On technological innovation, I just saw “Innovation Transforms Data Warehousing.”
We cannot expect an innovation to happen every now and then. Innovation requires creativity and out-of-box thinking and there is no guarantee of success. For whatever innovations we might have seen , those may be only the success stories. Behind them there could be hundred other innovative ideas which may have failed and hence got unnoticed. If some management student takes this as his research project then many of these failed ideas can be brought back to work by analyzing the reasons of their failures.
With 4G network fully deployed by major carriers later this year, higher bandwidth will surely push for higher DRAM capacity in smart devices. This will probably stay same way for another 2-3 years.