Analyst: DRAM “lurched” to profits in 2009; DDR3 changeover imminent

May 5, 2010 – The year 2009 started at one extreme (bad), but by year’s end the DRAM memory sector had managed to "lurch" to the high end of the scale to finish the year with its first profitability since 2007, according to data from iSuppli.

DRAM makers plunged to an eight-year revenue low in 1Q09 ($3.4B), but scrapped back with sequential >30% growth in both 2Q and 3Q, and surged with nearly 43% growth in 4Q to $8.7B — making the final quarter among the five best in the past decade, says Mike Howard, iSuppli senior analyst for DRAM, citing data from a new report. The industry also managed to post 15% margins in 4Q after 10 consecutive quarters in the black (two and a half years).

Reasons for the turnaround: increased bit shipments, higher average selling prices (ASP), and improving "demand-style supply dynamics" that will maintain healthy DRAM pricing "in the intermediate term" and thus continued profitability, the firm says.

More specifically:

  • ASPs were $2.66 in 4Q, up 20% from the third quarter and 55% year-on-year. Even with a forecasted decline in ASPs through 2010, "prices essentially will be flat compared to year-ago levels," Howard noted.
  • Bit shipments were led by DDR3 (35% of shipments in 4Q), while DDR2 (48%) "is on a ceaseless decline" — look for DDR3 shipments to overtake DDR2 once final 1Q10 numbers are out, Howard predicts.
  • Demand for DDR3 will be high this year, helping to keep ASPs higher. Intel’s roadmap, for example, "clearly points to a DDR3 future," with all the company’s Nehalem-based chips running it and a DDR3-only Atom processor is "in imminent release," said Howard. Still, prices for DDR3 and DDR2 will be kept somewhat close as manufacturers shift production to the newer technology in order to maximize revenue.
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DRAM revenues, 1Q09-4Q09. (Source: iSuppli)


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