Lower DRAM prices enable more DRAM per smartphone without higher pricetag

May 18, 2012 — Dynamic random access memory (DRAM) components’ percentage of the cost of a smartphone is decreasing, even as DRAM usage in smartphones is on the rise. Lowering average selling prices (ASPs) for DRAM components caused DRAM costs in smartphones to fall by more than half in the course of a year, according to an IHS iSuppli DRAM Market Brief.

Also read: DRAM partially recovers thanks to Elpida bankruptcy

In a sample of 19 smartphone dissections, IHS found that DRAM’s share of the cost of the total bill of materials (BOM) of a smartphone declined to 6.3% — about $11.81 — in Q1 2012, down 7.1 percentage points from 13.4% of total BOM in Q1 2011 — $19.48. This did not happen overnight — in Q2 2011 the share of DRAM in the total BOM fell to 8.5%, and the cost percentage never exceeded 7% since.

Figure. DRAM percentage share of smartphone BOM cost. SOURCE: IHS iSuppli Research, May 2012.

 

Q1 ’11

Q2 ’11

Q3 ’11

Q4 ’11

Q1 ’12

Percentage Share of BOM Cost

13.4%

8.5%

6.8%

6.2%

6.3%

 

Only smartphones that included discrete DRAMs were considered, for the sake of consistency phone to phone.

Smartphones “blur the line between a phone and a computing device,” said Dee Nguyen, memory analyst for IHS. As more processing power is added, DRAM has gained importance in smartphone designs — from 256 megabytes in Q1 2010 to 800 megabytes in Q1 2012. This, however, has not led to higher DRAM spending.

Many players have entered the DRAM market as chipmakers shift from PC-oriented designs to mobility components. With the available DRAM supply bolstered, ASPs fell 48% in 2011, bringing 1-gigabit units from $2.59 to $1.34. The contract price of a 2-gigabit low-power double data rate 2 (LPDDR2) DRAM declined 17% in Q4 2011.

In future smartphones, with “extensive application processing requirements, DRAM’s share of the BOM cost might rebound. “Handset manufacturers can throttle DRAM loading by only so much before risking lower performance,” Nguyen said. Phone designers are specifying more leading-edge and higher density DRAM, which comes at a higher cost. Once higher-cost LPDDR3 begins to take over from previous-generation LPDDR2, it will quickly outpace the adoption rate of LPDDR2. A small portion of smartphones will ship with LPDDR3 this year, but increased implementation is slated for 2013.

The migration to LPDDR3 will combine with higher DRAM requirements in smartphones to stem the tide of lower DRAM BOM costs.

IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. For more information, visit www.ihs.com.

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