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Memory Storage Industry to See Growth amid Increased Smartphone demand

The memory storage industry is expected to see overall growth in the second half of this year driven primarily by smartphone demand. As this occurs, commodity DRAM capacity will be tight, which is expected to remain unchanged in the short term. This will bring increased demand for server as well as mobile DRAM during the second half of the year, and DRAM vendors as a result are likely to report record-high profits. In terms of the NAND Flash market, the market is expected to turn from oversupply in the first half of the year into balanced supply during the second half, as OEM and module customer demand strengthens. All of these factors will push up pricing in the industry during the second half as a result, according to DRAMeXchange, a subsidiary of Taiwan-based market intelligence firm TrendForce. 

Smartphone shipments cause DRAM supply to be tight; prices expected to rise 

Smartphone shipments in 2014 are expected to grow 29% on year to 1.196 billion due to increased demand in China as a result of 4G TD-LTE developments; the release of the new iPhone; recovery in economies across the globe, and increased demand for entry-level and mid-range smartphones. Within that number, Chinese vendors’ shipments are expected to make up 37.3%. The Chinese vendors will mostly use eMCP technology in their smartphones while the new iPhone will use LPDDR3 1GB technology. This will lead to a slight increase in mobile DRAM prices during the third quarter and will quicken the exchange of LPDDR2 technology to LPDDR3, according to DRAMeXchange Assistant Vice President Avril Wu. 

PC DRAM supply meanwhile is expected to remain tight into the third quarter, which can already be seen from supply imbalances with Intel chips, and is expected to see a 2.6% increase in shipments during 2015. The tight supply comes as notebook shipments are recovering better than expected, particularly following the suspension of Windows XP services, coupled with new notebook sales as a result of subsidies that have prompted positive results within the corporate PC replacement cycle. 

Wu also noted that end PC DRAM supply has been tight due to increased demand for Big Data, and because commodity DRAM and mobile DRAM have been in tight supply. This has led to a slight increase in pricing for PC DRAM as well as an increase in the proportion of NAND Flash SSD used. 

Smartphones will help balance supply for NAND Flash 

Going into the second half of 2014 smartphones will play a major role in the NAND Flash market. According to DRAMeXchange Assistant Vice President Sean Yang, most new smartphones from major smartphone vendors will be released after mid-3Q14. OEM manufacturers meanwhile have been gathering reserves since June and NAND flash capacity is being shifted to system products, which is putting a strain on channel customer supply. This has led to an increase in NAND Flash pricing as a result. 

Enterprise SSD demand will also increase in the second half as a result of increased demand for server and cloud computing storage increases coupled with the peaking mobile device segment. Some vendors may also not be able to meet demand, which will tighten up supply for NAND Flash. Additionally, Yang said that NAND Flash manufacturers have also been shifting capacity to high profit products, which should help increase performances in the second half of the year.

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