There should be enough DRAM for the rest of the year as IC memory manufacturers continue to increase capacity.
Buyers of IC memory can expect a 2-5% increase in DRAM prices this year as the market grows 25% to $ 118 billion due to continued strong demand from the computer segment, especially from servers used in data centers.
This will mark the second consecutive year with 20% or more growth in DRAM revenue. Last year, the DRAM market grew 25 percent to $ 94 billion, according to researcher Yole Développement, a market research firm based in Lyon, France. This was the second best year for DRAM in terms of revenue. The best year was 2018, when sales were $ 100 billion.
“Last year was fantastic for the DRAM industry,” said Mike Howard, vice president of DRAM and memory research for Yole. “We have seen an increase in prices for most of the year and deliveries were still strong,” he said. Much of the growth is due to strong demand for servers used in data centers. “We don’t see any sign of a delay,” Howard said. “We expect 2022 to be another great year for DRAM. We expect the year to be a record, “said Howard.
DRAM bit deliveries will increase by 20% and revenue will increase by 25%, Howard said. About 35% of bit demand comes from data centers, while personal computers account for 18% of household supplies and smartphones account for about 26%.
“Smartphones have been the main engine, but they’re not evolving as fast as they used to,” Howard said. Smartphone shipments will be equal to or increase by about 1% in 2022. The DRAM content of smartphones is growing by about 10% a year, but not at the same rate as a few years ago, he said.
The good news for buyers of IC memory is that despite strong DRAM demand, supply should not be a problem in 2022, as DRAM manufacturers have added capacity over the years and plan to increase capacity in the future.
“Overall, DRAM is pretty much available,” Howard said. “Things got a little tight last year, but that was the normal tension in the DRAM market,” Howard said. The narrower than normal market last year led to a sharp rise in DRAM prices.
Brian Matas, vice president of market research for IC Insights, said the average price of DRAM rose 23% last year, rising from an average of $ 3.51 in 2020 to $ 4.30 in 2021. 11% increase in unit deliveries this year, average DRAM tags will rise by only 2% in 2022 to $ 4.39, according to Matas. Some researchers said prices could rise by up to 5 percent.
More good news: future annual price increases will be in single digits by 2026. In fact, in 2024, the average price will fall by 16 percent. In 2026, the average price of DRAM will be $ 4.21, which is less than the projected price for 2022, according to IC Insights.
One of the reasons the supply of DRAM is sufficient and the increase in prices will be modest is that the DRAM industry has not had problems with the supply chain that plagues other semiconductor segments.
“Much of this is that DRAM providers make their own DRAM,” Howard said. Suppliers of other semiconductors often use foundries to build their chips, and foundry capacity has been limited in the last few years. DRAM manufacturers routinely invest in new plants and add capacity.
“They know what the demand will be and they are building for that demand and they are generally able to meet it,” he said.
New factories are planned
The three main DRAM manufacturers – Samsung, SK Hynix and Micron – have added capacity and opened new plants in recent years and have plans to build new plants. For example, last year SK Hynix opened a new factory, “which will provide them with a lot of space for the next four years,” Howard said. In addition, Hynix plans to build four more plants in the coming years.
Samsung is building another factory at its “super facility” in Pyongyang, Korea, he said. Samsung seems to be constantly building new plants to keep up with growing demand. “When they finish one building, they start building another. That’s part of their long-term plan, “Howard said.
Last fall, US-based memory chip maker Micron Technology, Inc. said it would invest more than $ 150 billion globally over the next 10 years in memory and research and development (R&D) IP for DRAM and NAND due to expected high demand. The company noted that in addition to computers, there are other engines for the growth of DRAM, including 5G, artificial intelligence and cars.
“Growth drivers such as 5G and AI will expand the use of DRAM and other IP memory in the data center and smart end, as well as in areas such as automotive and consumer device diversity,” said Sanjay Nehrita, President and CEO of Micron.
Transition to 5G
While DRAM manufacturers are increasing production capacity, there may be some supply problems when the transition from dual data rate (DDR) 4 DRAM to DDR5 begins in the second half of the year. “There is little concern as there is a transition to DDR5, because DDR5 will need ICs to manage the power supply in modules, and some PMICs have been assigned to foundries,” Howard said. “There is some sensitivity to the availability of power management ICs.”
There has been a lot of demand for PMICs that have had long lead times over the last few years. The industry is moving to DDR5, as DDR5 DRAMs are faster than DDR4, have higher memory bandwidth, higher density and better efficiency, which are important for a number of applications, including games, video conversion and editing. in photos, among others.
Howard said the transition to DDR5 will begin later this year, and by the end of 2020, about 10% of all DRAMs delivered will be DDR5.
“It will take some time for DDR5 to reach the point where DRAM technology is dominant,” Howard said. DDR5 will ship more than DDR4 by the end of next year. However, DDR4 DRAM will continue to be produced for some time for several reasons. One is the price.
“DDR5 will be more expensive,” Howard said. With PCs, OEMs will decide whether to ship new systems with DDR4 or DDR5, he said. DDR4 will cost less, and “many mainstream computers will choose DDR4 just to keep costs under control,” Howard said.
“Initially, DDR5 will be used more on servers. Intel will ship Sapphire Rapids processors in the second half of the year, “Howard said. These processors will be used in servers. “This will be the first platform to support this DDR5,” he said.
Over time, DDR5 will also be used in mass computers at a lower cost due to its higher bandwidth. “Usually the way it works is that once new technology is shipped in larger volumes than old technology, the price changes,” Howard said. With larger volumes, DDR5 “will become cheaper, and once that happens, you start to see a rush to the DDR4 outputs,” he said. By 2024, most DRAM shipments will be DDR5.
Demand for DRAM will increase
Over the next few years, demand for DRAM, DDR4 or DDR5 will continue to grow due to strong demand from the computer, communications and consumer segments. In addition, the automotive industry may become a more important driver for DRAM in the not-too-distant future, as more vehicles will be equipped with advanced driver assistance systems and more electric and autonomous vehicles will be delivered.
ADAS systems, which are more widely designed in vehicles, require DRAM for high-resolution displays and tool consoles and head-up displays. DRAM is also needed for camera processing and high bandwidth input. In addition, autonomous vehicles will require DRAM to handle high bandwidth input sources.
Matas said the automotive industry was one of his target areas until the middle of this decade for Micron. He said some electric vehicles have Level III autonomous capabilities and will require 140 GB of DRAM.
“There won’t be many of these vehicles shipped in 2022,” but it could be an important driver for DRAM in the future, he said.