The end of graphics memory price margins? iSuppli sees GPU falling to CPU

(November 11, 2010) — The accelerated trend in the PC market toward integrating graphics capabilities into the central processing unit (CPU) will have a negative impact on graphics-oriented memory, causing its share of the overall DRAM market to decline during the next few years, according to the market research firm iSuppli Corp.

A specialty DRAM segment, graphics memory will grow only slightly at the beginning of 2011, despite its relative insulation from the more disruptive fluctuations of the commodity memory market. Graphics in Q1 2011 will make up 5% of the overall market for memory.

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The market will begin a slight but steady decline starting in Q4 2011. By 2014, the graphics segment will account for roughly 4.4% of memory chips (Figure).

"While graphics memory commands a price premium and is more stable in demand compared to commodity DRAM, the market is not projected to grow dramatically in the future," said Mike Howard, senior analyst for DRAM at iSuppli. "In the coming years, demand for graphic memory will ease as manufacturing trends favor the integration of the graphic processing unit (GPU) — the microprocessor responsible for rendering 2-D or 3-D images — into a computer’s CPU." While the high-end graphics provided by dedicated video cards still will be needed for immersive gaming and similar activities that require advanced memory, an integrated approach — in which graphic functionality uses the system memory of a computer — will satisfy most PC users.

Graphics memory challenges

The flattening of the graphics memory segment represents a major change, considering the attractive margins enjoyed by the segment and the intense efforts among fierce rivals and major players alike to make their presence felt in the market. The graphics market is expected to remain a build-to-order segment, with prices based more on manufacturing costs than overall supply/demand dynamics. Graphics memory will remain in demand by game-console makers and high-end graphics cards, but GPUs will be less sought after by PC makers.

Micron Inc. has been developing a graphics memory product for some time, hiring key executives from now-bankrupt Qimonda AG of Germany, whose commanding share of market once rivaled that of leader Samsung Electronics. Qimonda’s bankruptcy, in turn, has benefited Korean player Hynix Semiconductor, which rushed in to fill the gap and is now Samsung’s main contender for hefty spoils.

Another player, Elpida Memory Inc. from Japan, is beginning the production of memory technology specific to graphic cards known as GDDR3 and GDDR5. Elpida’s present share of market may be small, but the company’s entrance into the segment is likely to shake up things. As additional competitors enter the market, Samsung and Hynix may well be forced to surrender market share to Elpida and other new upstarts. Elpida and Toshiba have expanded spending to compete with Samsung

Industry players are watching Intel Corp., which next year is releasing the Sandy Bridge platform for integrated graphics, intended to match the performance of low-end discrete graphic cards. Such a move, iSuppli maintains, could further alter the general terrain of the graphic market.

Learn more about the latest developments in the DRAM market and industry with Howard’s recent report, DRAM: The Changing Landscape of Graphics Memory. iSuppli’s market intelligence helps technology companies achieve market leadership. The consumption of semiconductors is vital for the semiconductor supply chain industry, where shifts in strategies can impact business operations and profits. For more information, visit

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