IC Insights Bulletin: DRAM on Track to Be Worst-Performing Market in 2016

16% plunge in DRAM ASP expected to lead to 19% DRAM market decline.

Aug. 10, 2016 – 6% plunge in DRAM ASP expected to lead to 19% DRAM market decline.

The year 2016 is not expected to be a good one for the total memory market and the main culprit is DRAM. Declining shipments of desktop and notebook computers, the biggest users of DRAM, as well as declining tablet PC shipments and slowing growth of smartphone units have created excess inventory and suppliers have been forced to greatly reduce average selling prices in order to move parts. A DRAM ASP decline of 16% coupled with a forecast 3% decline in DRAM unit shipments is expected to result in the DRAM market declining 19% in 2016 (Figure 1), lowest among the 33 IC product categories IC Insights tracks in detail. This steep decline will be a drag on growth for the total memory market (-11%) and for the total IC market (-2%) in 2016.

Figure 1

Big swings in average selling price are not new to the DRAM market. Annual DRAM average selling price increases of 48% and 26% in 2013 and 2014 propelled the DRAM market to more than 30% growth each year. In fact, the DRAM market was the strongest growing IC product segment in each of those years (Figure 2). Then, marketshare grabs and excess inventory started the cycle of steep price cuts in the second half of 2015 and that continued through the first half of 2016.

Figure 2

Figure 3 plots changes in annual DRAM average selling prices starting in 2007. Looking more like the profile of an alpine mountain range, DRAM ASP growth has taken several dramatic upward and downward turns since 2007, confirming the volatility of this IC market segment. When coupled with strength or weakness in DRAM unit shipments, bit volume demand, and the amount of capacity and capital spending dedicated to DRAM production each year, this market can turn quickly up or down.

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