Higher average selling prices (ASPs) for DRAM and NAND flash is expected to drive 10 percent growth in the memory IC market in 2017 after two years of decline, according to a new report from IC Insights. Clearly, this means no buyer’s market for memory ICs in 2017.
In 2015, the memory IC market declined by three percent despite favorable market conditions, including supplier consolidation, limited capacity expansion, and emerging applications, according to the researcher. The same market conditions remained in 2016 until the second half of the year when ASPs began to rise for DRAMs and NAND flash.
However, in 2017, IC Insights forecasts the total memory IC market to rise by 10 percent, reaching a new record high of $85.3 billion due to higher ASPs for DRAM and NAND flash. The report also indicates continued growth through the forecast with sales reaching $100 billion in 2020 and nearly $110 billion in 2021.
This translates into a compound annual growth rate (CAGR) of 7.3 percent over the forecast period of 2016 to 2021, which is 2.4 points higher than the total IC market. Unit shipments are forecast to grow at a CAGR of 5.6 percent.
Although overall memory IC ASPs fell three percent in 2015 and dropped another 10 percent in 2016, IC Insight’s analysts expect the market to increase throughout the forecast period at an average annual rate of 1.8 percent with the exception of 2020.
IC Insights forecasts a “strong increase” in DRAM ASPs, which will lift the DRAM market to 11 percent growth in 2017. The NAND flash segment, the only memory segment that increased in 2016, is expected to increase by 10 percent, driving the total memory IC market up 10 percent next year.
Other industry analysts also expect DRAM and NAND flash prices to continue to rise. DRAMeXchange, a division of TrendForce, forecasts that DRAM bit supply will expand by less than 20 percent annually in 2017, resulting in tight supply and higher prices as long as there is no significant weakening in demand. The market researcher also expects NAND flash supply to remain tight in the first quarter of 2017.
“The top three suppliers that have made the DRAM into an oligopoly will keep the overall supply from expanding significantly in 2017,” said Avril Wu, research director of DRAMeXchange, in a statement. “In terms of wafer capacity, next year’s overall level will be about the same as this year’s. As for bit supply, the main growth driver during 2017 will be the industry’s migration from 20nm-class processes to the more advanced 1Y (10nm-class) processes.
Not expanding production capacity is always bad news for buyers because it can lead to shortages and higher tags. A few of the best strategies for buyers to ensure supply is to sign long-term contracts with their suppliers, qualify new suppliers, and don’t beat them down on pricing when times are good because they will remember when there are shortages.