IHS: Micron boosts DRAM market
The total market for DRAM achieved its best performance yet in 11 quarters
Micron made a vigorous ascent that also propelled the total market for DRAM to its best performance yet in 11 quarters, according to IHS' new DRAM Dynamics brief.
Micron ended the third quarter with sales of $2.63 billion, up a sizzling 131.3 percent from $1.14 billion in the earlier quarter, to give the Idaho-based maker 27.4 percent market share. Micron remains at No. 3 overall behind top-ranked Samsung, but is now within striking distance of second-ranked SK Hynix.
Samsung still has a commanding lead with 36.8 percent market share of DRAM, but SK Hynix, with 27.8 percent share, is now just four-tenths of a percentage point ahead of Micron.
Micron's market share had been hovering in the 10 to 15 percent range for the last several years, but the addition of Elpida's revenue to its column has made a significant difference.
The closing of the Elpida acquisition, more than a year in the making and a formidable rival of Micron in the past, will now more than double Micron's DRAM manufacturing capability. This means Micron will now claim 25 to 30 percent market share from this point forward.
Micron's market share in the third quarter received an additional bump because of the company's high exposure to the PC DRAM space, which has seen prices appreciate considerably since November 2012. Nearly 35 percent of Micron's revenue came from sales of PC DRAM, IHS estimates.
Overall the global DRAM market continued its blistering pace of expansion in the third quarter, with revenue up 10 percent sequentially to reach $9.59 billion. Not since the third quarter of 2010 has industry revenue climbed so high when the market's takings then hit $10.68 billion.
Industry revenues had hovered at the $6 billion to $7 billion range for seven quarters beginning in the third quarter of 2010 and then breached the $8 billion mark in the second quarter, before making another substantial push this time to end up in rarefied territory.
Growth for the latest period was driven by an increase in shipments and average selling prices (ASP). Shipments are up 5 percent, while ASPs have jumped nearly 7 percent to reach $1.00 per gigabyte.
The DRAM industry is currently on a tear, helped by industry consolidation - including the Micron acquisition of Elpida - that has now left just three major producers, resulting in greater stability and higher prices because of controlled production, benefiting the remaining players.
Samsung expands shipments after SK Hynix fire
SK Hynix suffered a setback after a fire broke out at its Wuxi, China, plant on September 4th, notably impacting the company's DRAM shipments in the third quarter.
After growing nearly 40 percent in the second quarter, SK Hynix saw only a 4 percent uptick in revenue in the most recent period because of the fire. The impact of the disaster will be felt through the end of 2013, IHS predicts, but the company should be back to near normal by the end of the year.
Meanwhile, Samsung - already the undisputed leader of DRAM - took advantage of the SK Hynix calamity to grow its own shipments by nearly 15 percent on the quarter, along with a 7 percent hike in ASP. Such results could put Samsung on track to reap record earnings in the fourth quarter - Samsung's peak quarterly revenue was $4.35 billion in the third quarter of 2010.
For the fourth quarter, total DRAM shipments and prices are forecast to keep climbing. While signs suggest that prices have now reached their current peak with the spot market starting to soften, long-term prospects continue to look positive. And companies that outgrow the market average, such as Micron and Samsung, could well see revenues continue to go up.
