Market Trends of Dynamic Random Access Memory (DRAM) Industry
Datacenter Application Segment is Expected to Hold Significant Market Share
- The COVID-19 pandemic accelerated the use of digital platforms and cloud services, boosting data center development. As DRAM is an essential component for the proper functioning of modern enterprise and data center applications, the growth in data centers has significantly fueled the demand for the market. According to Cloudscene, as of September 2023, there are over 9380 data centers worldwide.
- Since 2022, DRAM suppliers have been working towards adjusting their product mixes to assign more wafer input to server DRAM products while minimizing the wafer input for mobile DRAM products. Two reasons have driven this trend. Firstly, the demand outlook is bright for the server DRAM segment. The latest server platforms from AMD and Intel finally shipped to OEMs in 2022 but are expected to need ~six months for qualifying, facilitating a headwind to near-term server shipments and associated memory demand. Simultaneously, DRAM suppliers are building up significant inventory positions as production surge has continued to outpace demand.
- On the second position, the reason lies that the mobile DRAM segment has faced significant oversupply during 2022, and moving into 2023, the projections on the development of smartphone shipments and the surge in the average DRAM content of smartphones remain pretty conservative. Resultantly, DRAM suppliers intend to keep expanding the share of server DRAM in their product mixes, thus providing significant growth in the data center segment.
- Semiconductor manufacturers are likely to respond to changes in demand by producing more dynamic RAM (DRAM) for servers than for mobile devices this year, a milestone highlighting increasing enterprise use of emerging technology related to cloud computing, AI, and high-performance computing (HPC) applications. To handle the emerging-tech workloads, servers' average DRAM content is expected to increase significantly.
- Moreover, in the data center segment, buyer inventory of DDR5 has been gaining popularity. For instance, Micron Technology unveiled its DDR5 chip, which it stated found the most demand from data center applications before popping up in client devices. Furthermore, Renesas has been leading the data center market due to new chipsets for High-Performance Memory Modules Based on DDR5 Multiplexer Combined Ranks (MCR) Dual In-line Memory modules. Meanwhile, Samsung's intensified production cutbacks have notably shrunk DDR4 wafer inputs, causing a supply crunch in server DDR4 stocks. This scenario leaves no leeway for further server DDR4 price reductions.
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North America is Expected to Hold Significant Market Share
- The market for DRAM is expected to register significant growth in the region owing to its increasing adoption in data centers, automotive, and consumer electronics.
- In the United States, the growth of DRAM is projected to extend beyond personal devices and find increased utilization in cloud computing, servers, and automotive applications. Smartphones are increasingly incorporating DRAM, and mobile phones are anticipated to hold a significant portion of the DRAM market due to their expanding market penetration and declining prices, resulting in greater consumer acceptance. As the range of use cases and mobile phone adoption continues to diversify and expand, the demand for the DRAM market is expected to rise.
- The mobile phone industry in the United States is one of the largest industries, significantly impacting the market's growth positively. The rising investments and the growing production rate across the region are acting as significant market drivers.
- Data center operators must optimize platform performance by leveraging advanced memory capabilities and processor advancements, fueling the demand for DDR5 DRAMs in the market. The United States is consistently experiencing substantial investments in data centers, which is anticipated to stimulate the requirement for DRAMs.
- Another significant factor influencing the market is implementing 5G technology. Despite its recent introduction, 5G technology and wireless communication as a whole are projected to have a substantial effect on the market. As per Accenture's analysis, the adoption of 5G is anticipated to contribute more than USD 1.5 trillion to the gross domestic product (GDP) of the United States (US) between 2021 and 2025.
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