China’s Memory Consumption Reaches 20%

by

China's appetite for electronics continues to grow in spite of some recent softness in its manufacturing sector. As of this year, nearly 4.789 billion DRAM chips and 3.518 billion NAND Flash chips from the 2Gb category have been consumed in China, accounting for 19.2 percent and 20.6 percent, respectively, of the world's total DRAM and NAND Flash output, according to market research firm TrendForce.

Overall, China’s GDP has achieved significant growth over the past few years. The nation’s consumer market is gobbling up PCs, smartphones and tablets, spurring the increased demand for memory. China's PC DRAM consumption is currently at approximately 15 percent, TrendForce reports. Not surprisingly, domestic brands are doing particularly well in the market: PC maker Lenovo has managed to raise the scale of its business operations over the years and is currently acquiring other companies as a means to boost its presence among first tier manufacturers. While the company is still competing fiercely with Hewlett-Packard for the top position in the PC market, its overall PC shipments are already ahead of all of its other competitors'. For 2015, DRAMeXchange predicts that Lenovo's market share will reach approximately 17 percent.

Mobile DRAM is expected to gradually replace PC DRAM as the mainstream in China given the country's growing smartphone and tablet sales. Aside from ZTE and Huawei -- which are doing relatively well overseas -- most China-based smartphone brands are expected to focus on the domestic market. Based on TrendForce's 2014 market statistics, China alone already accounts for 28 percent of Mobile DRAM's overall bit demand. The importance of China's economic development to the entire DRAM industry is expected to become more apparent next year as that proportion rises to over 40 percent.

As the NAND Flash manufacturing processes are currently advancing to under 1ynm, many NAND Flash applications, including smartphone and tablet-based eMMCs and notebook-based SSDs, are showing improved growth. Competition among global OEM manufacturers, meanwhile, is starting to become more intense, with brands other than Apple and Samsung starting to make their way into China’s lucrative market. The level of China's NAND Flash consumption has managed to grow considerably over recent years due to Lenovo's rise to prominence, the above-average growth shown by China's emerging brands, and the improving standards of China's hardware designs. By the end of 2014, DRAMeXchange projects that the NAND Flash market's total value in China will reach up to US$ 6.3 billion. The proportion of China's overall NAND Flash usage relative to the world's NAND Flash output, on the other hand, is expected to hit 20.6 percent in 2014, and 30 percent or more in 2015.

The Chinese government is expected to continue policies that have spurred growth in the region. China's efforts to transform from a manufacturing-based to consumption-based economy have been largely successful. The Chinese government's current goal is to improve the country's outlook by implementing strategic policies that are aimed at enhancing its industrial capabilities. One such policy involves increasing the imports of semiconductor components such as smartphone CPU, AP, DRAM, and NAND Flash, the combined value of which exceeds the value of China's imports for oil. In the future, it would be interesting to see whether UNIS's (Unisplendour Corporation Limited) efforts to integrate resources from Spreadtrum Communications, RDA, and Intel will be successful.

Due to the relatively high proportion of CPU, DRAM, and NAND Flash components imported by China, the government policies that are implemented with regard to these three product categories may prove critical to the country's industries. A few days ago, the Chinese government announced a policy worth NT$600 billion that involves mastering the technologies at the front end of the country's semiconductor supply chain and applying these technologies downstream. The main purpose behind this is to enable the country's supply chains to be more integrated and to allow momentum in China's domestic industries to persist.