(November 15, 2010) — Samsung Electronics Co. Ltd. became the only Top 5 DRAM supplier to achieve revenue growth in Q3 2010, solidifying its domination of the market, according to the market research firm iSuppli Corp.
Samsung Electronics sold $4.4 billion worth of DRAM memory chips in the third quarter, up 14.3% from $3.8 billion in the second quarter. With the next four largest suppliers all suffering sequential declines in revenue, the company’s share of the market in the third quarter surged to 40.7%, up from 35.4% in the previous quarter.
Samsung’s double-digit growth occured even as overall DRAM market revenue in the third quarter declined slightly to $10.72 billion, down 0.6% from $10.78 billion.
"Samsung has been vocal about its desire to expand its DRAM market share to as high as 50%," said Mike Howard, senior analyst for iSuppli. "The third-quarter results show Samsung has put its money where its mouth is. By investing heavily in expanding production and advancing its manufacturing technology, the company has been able to cut pricing and to eat into the market share of its competitors."
Howard expects Samsung to continue to gain share in 2011 as it presses its market-share campaign. "The only limitations on Samsung’s growth will be how much share its largest PC OEM customers will allow it to take, how long the company can continue to cut prices and how much it can increase its dominance before government regulators raise anti-competitive concerns," Howard said.
The remaining players in the DRAM industry face a challenging 2011. They not only need to advance their manufacturing technology as aggressively as Samsung — an expensive and technically difficult task — they must also keep wafer output at current levels at the very least.
As chip prices continue dropping, some manufacturers could find their production costs rising above their average selling prices (ASP). The likely reaction to this dynamic would be a reduction of output and a significant surrender of market share, as was witnessed in 2008.
"2011 is shaping up to be a time when DRAM companies are going to have to move incredibly fast just to keep up with Samsung," Howard said. "Those companies that are unable to advance their manufacturing processes at least as quickly as Samsung will see their market shares continue to shrink. It looks like the DRAM industry could very well be heading for consolidation, with some competitors being acquired or getting forced from the market."
At the opposite end of the performance spectrum was Micron Technology Inc., which posted the worst performance among the Top 5 DRAM suppliers. The U.S.-based company posted revenue of $1.1 billion, down 21.4% from $1.4 billion in the second quarter. While the company maintained the No. 4 market position, its share fell to 10.5%, down from 13.3% in the second quarter.
Micron’s market share retreat over the past two quarters is primarily due to production challenges at its Inotera facility, Howard said. "However, Micron will not lose further market share in 2011 and might actually expand its position slightly. Micron’s DRAM wafer production will grow in 2011 due to the significant uptick in utilization anticipated at Inotera. Furthermore, Micron’s margins will benefit from its effort to transition to more advanced manufacturing processes — an effort that is as aggressive as Samsung’s."
After Samsung, the next best performance among the Top 5 DRAM suppliers was posted by fellow South Korean semiconductor supplier Hynix Semiconductor Inc. Hynix saw its revenue dip by just 2.9% to $2.25 billion, down from $2.31 billion in the second quarter.
"Hynix’s decline in revenue was largely due to its very modest growth in bit production and its falling average selling prices," Howard said.
Howard’s report, "DRAM: Samsung’s Market Share Balloons in Q3," is available at http://www.isuppli.com/Memory-and-Storage/Pages/DRAM-Samsung-s-Market-Share-Balloons-in-Q3.aspx?PRX
iSuppli’s market intelligence helps technology companies achieve market leadership. iSuppli provides comprehensive Memory & Storage Market Research. To learn more, e-mail firstname.lastname@example.org or visit www.isuppli.com
Subscribe to Solid State Technology/Advanced Packaging. Follow Solid State Technology on Twitter.com via editors Pete Singer, twitter.com/PetesTweetsPW and Debra Vogler, twitter.com/dvogler_PV_semi. Or join our Facebook group