by 
For better or worse, DRAM and flash memory have considerable influence on the fortunes of the overall semiconductor market. While memory bolstered chip sales in 2017 and 2018, it will likely have a negative impact in 2019, according to IC Insights.
The market research firm expects the memory market will decline by 24 percent – or $38.6 billion -- this year while IHS Markit forecasts a 22 percent drop. That could drag the total semiconductor market down by 9 percent, IC Insights said. Factoring out memory, the total IC market growth rate is forecast to be flat in 2019.
Recent concerns over market conditions, coupled with a sharp downturn in average selling prices, will lead the DRAM market to reach just $77 billion in 2019, according to IHS. Falling prices and weak demand will likely continue through the third quarter.
The DRAM and NAND flash market cycles continue to be driven by fluctuations in capital spending and capacity, IC Insights said. Little has changed regarding the extremely volatile nature of DRAM.
At $99.4 billion, the DRAM market was by far the largest single product category in the semiconductor industry in 2018, exceeding NAND flash ($59.4 billion), the second-largest market by $40 billion. Since 2013, the memory market has been a positive influence on total annual worldwide IC market growth and only once a headwind.
For example, the memory market surged by 64 percent in 2017, IHS reported, boosting the total semiconductor market growth rate by 14 percent. Despite a fourth quarter slowdown, the 2018 memory market grew by a strong 26 percent, providing a very substantial six-point positive impact on worldwide IC market growth for the full year. For 2019, though, memory is forecast to be a drag on the IC market.
“The recent decision announced by Micron Technologies to cut memory chip output, in the face of stalling demand is not surprising,” said Rachel Young, associate director at IHS Markit. “In fact, most memory chip manufactures are taking measures to manage supply output and inventory levels, to address softening demand.”
Typically, softening memory demand would spur inventory dumping and opportunistic buying in the open market. That hasn't been the case so far, according to John McKay, president of sales for independent distributor Freedom. "We're not seeing a lot of excess," McKay said. Additionally, although some devices were on allocation in 2018, there's hasn't been a precipitous price drop. "In high-end memory there may be shortages due to a shift in demand, and capacity, for leading-edge technologies," McKay said. "But in the rest of the market, there was no reason for allocation. " Demand for Micron parts, he added, has increased since the company announced it was scaling back production.
Supply-and-demand growth will remain in the 20 percent range in the coming years, keeping the market generally balanced, according to IHS. However, some periods of oversupply and undersupply are expected, with servers and mobile devices leading the demand categories. In the longer term, IHS said strong demand for server DRAM – especially from Amazon, Microsoft, Facebook, Google, Tencent, Baidu, Alibaba and other hyperscale companies – means the server segment will grow from about 28 percent of bit demand in 2018 to over 50 percent of bit demand in 2023. Smartphone unit shipments and content growth have slowed significantly since 2016, but smartphones rank as the second largest DRAM consumption segment. An average of 28 percent of overall DRAM bit demand will come from smartphones between 2019 and 2023.
Ultimately, the memory market may eventually see some kind cyclical stability, Micron Technologies Executive VP and Chief Business Officer Sumit Sadana recently told DigiTimes. “Overall, emerging applications such as 5G, AI, machine learning, and even autonomous driving are drivers for the long-term promising outlook of the memory storage market,” he said. “The memory-chip sector is also gearing up for its next 10-20 years of prosperity. We believe that NAND bit volume demand growth will average about 35 percent annually in the coming years, and 15 percent to 19 percent for DRAM bit demand growth."
“We also believe that the memory chip industry will move towards a less volatile structure," Sadana told the publication. "There will be more challenges of transitioning to a new process node in the sub-10nm era while end-market demand will be driven by a more diverse range of applications.”
