DRAM shortage: The perfect storm

DRAM Shortage: The Perfect Storm PDF Download

The instability in the pricing for DRAM and flash components is a great example of the fundamental economic relationship between supply and demand. As manufacturers continue to realign their focus and diversify, the industry is taking notice of an organic increase in demand and more importantly, the price.

The spike in pricing is nothing new to any of us. We’ve experienced shortages due to unforeseen events ranging from natural disasters to industrial accidents. The current catalysts creating the hyperinflation in pricing currently are what could only be referred to as the perfect storm. Let’s not forget that the memory market is primarily lead by three powerhouses, Samsung, SK Hynix, and Micron and when combined, these three companies hold over 93% of the global market. With this in mind, we’ve identified 3 main trends causing the shortage resulting in a spike in prices.

1. Demand Shifts and Cohabitation
These manufacturers have collectively shifted production to accommodate for an increased demand in both the mobile and server segments of the market. This shift, along with improved operating margins, and a lack of innovation have found themselves peacefully cohabitating in an ecosystem commonly known as an oligopoly.

2. Transitions
Aside from this friendly coexistence, let’s not forget the transitions from DDR3 to DDR4 and 2D to 3D. Both have caused considerable strains in the manufacturers’ ability to support newer technologies while maintaining support of legacy components.

3. Process Migrations
Changes have been implemented to DRAM die revisions causing several delays in attaining desired yield rates and have taken time to build up manufacturing yields. A situation like this negatively impacts the production capacity of the more popular memory products resulting in a shortage.

Will this perfect storm continue in 2017? It seems that this storm will linger throughout 2017. The market’s three powerhouses will likely continue their peaceful cohabitation in their friendly ecosystem. Combine that with the growing need for better and faster products, you can be sure that there doesn’t seem to be an end in sight.

Source(s)
1. DRAMeXchange - World leading DRAM and NAND Flash market research firm, with more than a decade of most authoritative database. (n.d.). Retrieved January 25, 2017, from http://www.dramexchange.com/

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