Earlier this week we talked about the impact of global, macro-economic variables weighing on semiconductor growth and market trending (for both geo-economic and device forecasts). The wider ramifications of the unsettling market conditions are also being felt in the (generally) volatile memory market.
To be sure, 1Q11 did turn out to see positive revenue growth, quarter over quarter (QoQ), near the 10% range for NAND flash (or US $5.36 billion), according to DRAMeXchange here in early May.
What happened? The impact of the Japan disasters on memory availability was not problematic, due in part to existing inventory and in part to weakening demand. Fortunately, as we have headed into the seasonally weaker demand cycle across semi, inventory draw-down has helped to keep supply in check. However, as mature economies' consumer confidence, job numbers, and corporate spending are waning presently, there is not the refresh demand from the major OEMs for tablet and smartphone components that was expected early on in 1Q11 (see this brief from SIA, and this article from EETimesAsia).
The result? Market prices, both spot and contract, for not only NAND but also DRAM have been softening (see here and here from DRAMeXchange). It's not so much a bottom dropping out (thankfully), but a true softening, averaging ASP declines in the single digits across the set of memory components (see this iSuppli market review for DRAM, and this one for NOR flash, and this recap for NAND flash from DRAMeXchange).
What's next? Well, depending on who you ask, there are mixed short-term forecasts for memory. The reasons are based on the convergence of the big-picture economic situation with the seasonally slow summer period for electronics purchasing. Taken the seasonal slowdown with economic slowdowns together we see a slightly above average seasonal decline in ASPs across memory (though not plunging – very important caveat). As cited by DigiTimes on 6-3-11, "Seasonal demand weakness, coupled with persistent supply growth, continue weighing on pricing. And the negative impact is also spreading across the channels, according to inSpectrum."
The question at hand, then, is when forecasts might indicate a rise in ASPs, and with that a return to better revenue levels. The catalyst for such a rise requires a demand driver that can spur component numbers for the various memory sectors (okay, we'll happily even just take some of the memory sectors). With tablet PC proliferation, Apple's WWDC next week, increased cloud offerings promoting new streaming capabilities for consumer entertainment and enhancements to corporate data retrieval, it looks as though SSDs are set to continue their growth trend. That certainly will help NAND and NOR, as well as mobile DRAM. Add to that positive trend the emerging economies which continue to drive demand for a broad base of PC sector devices, additional firming of DRAM will also occur. The likelihood of an increase demand for PCs with additional DRAM content is seen as good (particularly with ASP declines encouraging increased density levels), according to this recent iSuppli forecast for the global DRAM module market to still reach 11% growth for 2011.
In short, rebounds across memory are in the forecast, the question is when during 2H11 this will happen.