IC Insights shows that, over the past two years, DRAM manufacturers have been operating their memory fabs at nearly full capacity, which has resulted in steadily increasing DRAM prices and sizable profits for suppliers along the way. The DRAM average selling price (ASP) reached $6.79 in August 2018, a 165% increase from two years earlier in August of 2016. Although the DRAM ASP growth rate has slowed this year compared to last, it has remained on a solid upward trajectory through the first eight months of 2018. “The DRAM market is known for being very cyclical and after experiencing strong gains for two years, historical precedence now strongly suggests that the DRAM ASP (and market) will soon begin trending downward – IC Insights explains -. One indicator suggesting that the DRAM ASP is on the verge of decline is back-to-back years of huge increases in DRAM capital spending to expand or add new fab capacity. DRAM capital spending jumped 81% to $16.3 billion in 2017 and is expected to climb another 40% to $22.9 billion this year. Capex spending at these levels would normally lead to an overwhelming flood of new capacity and a subsequent rapid decline in prices. However, what is slightly different this time around is that big productivity gains normally associated with significant spending upgrades are much less at the sub-20nm process node now being used by the top DRAM suppliers as compared to the gains seen in previous generations”. The DRAM ASP is forecast to rise 38% in 2018 to $6.65, but IC Insights forecasts that DRAM market growth will cool as additional capacity is brought online and supply constraints begin to ease. “Of course, a wildcard in the DRAM market is the role and impact that the startup Chinese companies will have over the next few years – IC Insights says -. It is estimated that China accounts for approximately 40% of the DRAM market and approximately 35% of the flash memory market”.
