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Memory Outlook for 2010 – Build to Forecast

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At Smith we buy and sell memory every day. We handle DRAM, SRAM, Graphic RAM, Nand and NOR Flash. As the commodity manager for memory I can see supply and demand across components and across our global offices, which gives me a pretty complete world view of the memory market. Here's what I see for 2010:

  • 2010 should see constant tightness and long lead times on most types of memory all year. The main two reasons are 1.) Due to the credit crunch, chip manufacturers reinvested less in 2009 to grow production capacity than in previous years. Although 2010 will see a return to high re-investment in this area, (a predicted $8-10B worldwide) it will not have an effect on production capacity until at least 4Q10. 2.) The wide array of products now available from chip makers makes it harder for them to forecast accurately, which is exacerbated by the continued introduction and successes of new products and fads or unforeseen failure or obsolescence of technology in the retail market; which increase or decrease expected demand accordingly.

  • Over the last year almost every chip manufacturer has gone from a commodity "build-it-and-they-will-come" plan - where they build a bit of everything and hope the customer will come calling - to a "build to forecast, but forecast accurately" plan. That means fewer parts in excess on the end user shelves, longer lead times and stricter ASPs. Industrial and extended temps parts, odd cas latencies, slower speeds, and odd packages (BGA for DDR1 and SDRAM, since TSOP is the norm) will be the casualties in this plan, and become more and more scarce as we move further into the year.

I see these factors affecting the market of the various memory types in 2010 differently.

  • Personal computer demand around the world continues to climb, especially in China and developing countries. Though the demand for desktop PCs is growing at a lesser rate than it did during 2009, the higher rate of laptop demand more than makes up for it. That, of course, means demand for DDR -- a mix of DDR2 and DDR3.

  • At the end of 2009, DDR3 was used in about 25% of the new computers - PCs, laptops and servers combined - coming out. By the end of 2010, it should be up to 75-80%. While DDR3 will not have many other usages outside of this area, it will be the mainstream technology for most new PCs; PC3-10500( DDR3-1333) being the principal speed.

  • Look for server demand to continue to pick up in 2010; many companies who have put off upgrading or re-invigorating infrastructure for the last couple of years really need to do so now, as software demands upon a network are at an all time high. New servers developed in late 2009 and 2010 will use DDR3 memory. However, DDR2 production cutbacks at the chip manufacturer level should make DDR2 server modules and components harder to come by. We've already seen open market demand increase and pricing up 5% in through January end.

  • Already, DDR3 delivery is behind demand and that should continue during the first half of 2010. The estimate is DDR3 overall will be 2-4% short worldwide for the entire year.

  • The introduction of memory hungry Windows 7 will also help increase the GB/unit in the PC arena.

  • As I noted earlier, the rise of DDR3 will mean the demise of DDR2. Over 2010 it will drop from being in about 75% of the new computers to about 20-25%. But again, production cutbacks on the chip manufacturer level should make DDR2 availability tight.

  • SDRAM PC133 demand should decrease some in 2010 vs. 2009, but with wafer start decreases and EOL-ing of highly popular configurations or accepted generation revisions, availability will be limited. Lead times and pricing will likely increase throughout the year from all MNFs. Already Samsung and Micron have plans to EOL their very popular 32x16 SDRAM, which should start causing some problems come March. So, though demand will be down in 2010, pricing and should stay high and lead times long all year.

  • The Graphic RAM market is still in shortage due to the demise of Qimonda, but it is beginning to right itself. There are still shortages and long lead times and we expect to see that continue until at least mid-2010. Most MNFs however, have EOL-ed their multiple technology offerings to concentrate on gDDR3, which pairs best with current motherboard/PC needs. So builders must be highly aware of lifetime estimates in this area if creating new products.

  • Nand Flash pricing has steadied due to production cutbacks and rising demand, a trend which should continue throughout 2010.

  • Lower density NAND products, 1Gb and below, will all soon be going EOL one by one - starting at the smallest - and we could even see 2Gb & 4Gb go that route by the end of the year if chip production capacity does not increase. The continued introduction of new products using NAND as the main data storage also contributes to tightness on mid-range densities (8Gb-64Gb) and longer lead times. Fewer wafer starts on SLC product is causing longer lead times and tightness for NAND, and possible trouble in the industrial, aerospace, military and automotive fields.

  • For NOR Flash, usages are continually shrinking, but it will continue to be hard to find in the open market. Continued monetary uncertainty at Spansion, talk of Samsung stopping production, and rumors of a Micron/Numonyx merger make the NOR market unpredictable.

Thus, I expect in 2010, memory chip makers will likely: Promote DDR3 for computing; cutback on general DDR1 and SDRAM wafer starts; level off DDR2; and make only enough NAND Flash to fulfill forecasted orders, promoting higher densities over smaller densities.


Todd Banker, Memory Commodity Manager
Written on Thursday, 18 February 2010 18:20 by Todd Banker, Memory Commodity Manager

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