Mobile DRAM revenues hit record high in 2Q12, IHS says

Press release; Jessie Shen, DIGITIMES [Thursday 18 October 2012]

Mobile DRAM revenues rose to the highest level yet in the second quarter of 2012, driven by increased bit shipments and relatively steady pricing, according to IHS iSuppli. Revenues amounted to US$1.85 billion in the second quarter, up from US$1.83 billion in the first.

"The increase marked the fourth straight quarter of growth for mobile DRAM revenue," said Mike Howard, senior principal analyst for DRAM & memory at IHS. "This sustained growth is courtesy of the continued propulsive expansion of the smartphone and tablet markets, the two main

consumers of mobile DRAM. The second quarter this year also marked a new revenue record for the segment, exceeding the peak reached in the first quarter. The achievement is notable: While the overall DRAM market is down in 2012 compared to year-ago levels, mobile DRAM revenue is trending higher."

In yet another sign of the mobile segment's growing importance to the overall DRAM space, mobile DRAM commanded more than 26% of all DRAM revenues during the second quarter of 2012 - a significant improvement from 19% the same time a year ago, and from 11% two years ago in 2010, IHS indicated.

Two reasons account for mobile DRAM's rising market clout. First, mobile DRAM's share of total DRAM bit shipments is now at 17.8%, up from 7.9% in the first quarter, IHS said.

Second, the price of mobile DRAM has fallen less than that of its besieged cousin, commodity DRAM, IHS noted. While commodity DRAM historically has been subject to great swings in pricing—with the product losing as much as half of its value from the second to the fourth quarter last year alone—mobile DRAM pricing is less vulnerable, falling 10% per quarter on average.

Mobile DRAM also tends to be priced according to manufacturing cost, not based on the general balance between supply and demand. As a result, DRAM companies are able to earn a more reasonable margin for their mobile memory products—unlike in commodity DRAM, where negative margins are frequently the rule, IHS observed.

Samsung Electronics continued its unshakable hold at the top of the mobile DRAM market in the second quarter of 2012, with sales of US$1.1 billion, or a remarkable 61% of the global mobile DRAM market, according to IHS. With the success of smartphones such as the Galaxy S3, the South Korean electronics titan also is now one of the world's largest consumers of mobile DRAM. Samsung enjoyed a 3% improvement in sales during the quarter, and its year-to-year growth was even more impressive at 35%.

Fellow SK Hynix was No. 2 behind Samsung with sales of US$362 million, down from US$366 million in the first quarter and from US$377 million the same time a year ago, IHS said. Despite the loss, SK Hynix continued to hold down a fairly sizable share—equivalent to nearly 20% of the total mobile DRAM space.

Elpida Memory snagged a 13% share based on mobile DRAM revenues of US$245 million in the second quarter of 2012, while Micron Technology saw its share amount to 4% in light of US$79 million in revenues, IHS added.

For SK Hynix and Elpida in particular, the two have seen their share of activity increase at Apple during the past months because they supply mobile DRAM for the iPhone, IHS pointed out. Apple and Samsung, meanwhile, continue to challenge each other—in both the courtroom and the marketplace—with their mobile products.