DRAM industry on the road to recovery, study says

DRAM revenue more than doubled during the fourth quarter of 2009, according to iSuppli

Global revenue for DRAM more than doubled during the fourth quarter of 2009 on a year-over-year basis, driven by increased PC shipments and higher average selling prices, research firm iSuppli said on Thursday.

Revenue from worldwide DRAM sales was US$8.5 billion during the fourth quarter, compared to $4.13 billion during the fourth quarter of 2008, said Mike Howard, senior analyst at iSuppli. Revenue during the fourth quarter was up 40 percent sequentially, Howard said.

Last year's fourth quarter was the best quarter in recent memory for DRAM companies, Howard said. The quarter's revenue growth also builds momentum for continued growth during 2010. iSuppli is predicting DRAM revenue to be $31.9 billion this year, compared to revenue of $22.7 billion in 2009.

The worst of the economic downturn has passed and the DRAM industry is set to go back in growth mode, Howard said. Last year was tough for the DRAM industry, with revenue during the first quarter of 2009 the worst on record since 2001, when the dot-com bubble burst.

Taiwanese memory manufacturers reduced DRAM output because of oversupply by the end of 2008, but have since streamlined output, which has led to a steady price increase every quarter. Average selling prices grew sequentially by 16 percent in the fourth quarter.

More than half of the DRAM revenue comes from memory that goes into PCs, Howard said. In addition to higher average selling prices, DRAM revenue has grown at a steady rate as PC shipments rose last year, Howard said. The demand for DRAM increased alongside growing PC demand. According to IDC, PC shipments totaled 85.8 million units during the fourth quarter last year, growing 15.2 percent compared to the fourth quarter of 2008.

The launch of Windows 7 during the fourth quarter affected overall PC demand, but it didn't necessarily affect DRAM revenue, Howard said. Windows Vista had a greater impact on DRAM revenue as it was an OS that demanded more memory.

However, the 64-bit version Windows 7 OS could affect DRAM revenue this year as it has a higher memory ceiling, Howard said. Previous 32-bit Windows operating systems supported only 4GB of memory, but the 64-bit version of Windows 7 has no such ceiling.

The shift to DDR3 memory also played a role in higher DRAM revenue, but that will have a larger impact this year, Howard said. Systems based on Intel and Advanced Micro Devices chips used DDR3 and the cheaper DDR2 memory this year, but with the Nehalem microarchitecture, Intel is moving exclusively to DDR3 memory support. Intel's chips go into about 80 percent of the world's PCs, according to numbers from IDC.

A number of DRAM companies also recovered during the quarter, iSuppli said. DRAM revenue for companies like Elpida, Micron, Hynix and Samsung swelled, iSuppli said.

The top DRAM vendor during the fourth quarter was Samsung, which recorded revenue of $2.79 billion. Hynix was in second place with revenue of $1.89 billion, followed by Elpida with $1.68 billion. Micron was in fourth with revenue of $1.16 billion, followed by Nanya, which had DRAM revenue of $495 million.

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