ICinsights: Storage set to hit record highs this year

IC Insights recently published forecasts for 33 major IC product categories, including DRAM and NAND flash, in its latest report. As you can see from the updated forecast, memory IC sales rebounded 15% after a sharp decline in 2019 and a 2020 plagued by COVID. After that, it is expected to lift total memory revenue this year by 23% to $155.2 billion due to strong DRAM pricing.

According to their report, the average selling price of DRAM increased by 8% in the first quarter of this year compared to the previous quarter, and almost all the leading memory suppliers said in their most recent quarterly financial reports that they expect stronger demand in the second quarter.

ICinsights expects memory growth to continue into 2022, when total memory sales are expected to rise 16% to $180.4 billion, which would beat the all-time high of $163.3 billion set in 2018 at the peak of the last memory cycle. The memory market is expected to reach its next cyclical peak in 2023, when revenue grows to nearly $220 billion, surpassing the $200 billion sales level for the first time, before a cooling off period in 2024.

ICInsights also forecasts from 2020 to 2025. The overall memory market will grow at a CAGR of 10.6%.

By 2021, DRAM is expected to account for 56% of the memory market (Figure 2), while flash memory will have a 43% share. DRAM is also expected to account for the majority of memory cell shipments this year. Although there are still viable markets for other memory products (EEPROM, EPROM, ROM, SRAM, etc.), these segments are unlikely to account for more market share than they currently do.

Nikkei: Older DRAM prices tripled

In the semiconductor memory DRAM market, signs of shortages of “older products” are strengthening. The preferential price of large orders for older products has risen to nearly twice the low point in the second half of 2020, significantly exceeding the 50% increase in current mainstream products. The reason is that the demand for home appliances and other household appliances that support home consumption is strong, while the supply of enterprises is short. This, combined with the impact of the US-China friction, is driving prices higher.

DRAM is a memory that is embedded in information equipment and home appliances and used to temporarily store data. A current mainstream product called a DDR4 type is used in the latest personal computers and the like. In terms of the DDR3 type of the previous generation products, in addition to home appliances such as TVs that do not require the processing speed of personal computers, there are also needs for car navigation systems in automobiles.

There is currently a shortage of supply in the entire DRAM market. The person in charge of memory procurement at a semiconductor trading company in Japan pointed out that the DDR3 type, which belongs to the previous generation, is “more difficult to purchase and rarely rises in a short period of time.” The price of the 2GB DDR3 type memory, which has become an indicator, is about US$1.9 each in April, an increase of about 15% over the previous month. Nearly 2x the 2020 low. On the other hand, the mainstream DDR4 type (4GB) was $3.1, up more than 50% over the same period.

The preferential price for a large order is the price when a large number of stable purchases are made. Generally speaking, the unit price is easily lowered. However, the current previous generation products purchase the necessary amount of spot (real-time contracts) transactions as needed, and there is a tendency to easily increase the price.

As of about 10 years ago, the DDR3 type was the mainstream product that accounted for 70% of the DRAM market. However, semiconductor makers turned to investments in cutting-edge products, with South Korea’s Samsung Electronics and SK Hynix gradually reducing production. According to data from the British research company Omdia, as of January to March 2021, DDR3 type accounted for only 5% of the overall DRAM market. By the second half of 2021, the next-generation standard DDR5 type is considered to be fully popularized, and the industry’s trend toward cutting-edge products will be further strengthened.