IHS, DRAM, Prices, Lithography DRAM price reductions slowing, says IHS

SAN FRANCISCO—Average prices for DRAM memory chips are projected to fall more slowly through the rest of this year through next year, due largely a slowdown in migration to more advanced lithography systems, according to market research firm IHS iSuppli.

After dropping 14.2 percent in the first quarter, the global average decline in pricing for DRAM slowed to 12 percent in the second quarter, according to IHS (El Segundo, Calif.). The firm projects that the rate of DRAM price declines will slip to 9 percent in the third quarter and fall to just 4 percent in the fourth quarter. The rate of decline is expected to decline to just 1 percent in the first quarter of 2012, then remain in the 3 to 4 percent range during the rest of 2012, IHS predicts.

According to IHS, the slowdown in price reductions parallels a deceleration in the rate of migration to more advanced lithography used for manufacturing DRAM. Pricing trends for DRAM are largely driven by the progression of manufacturing technology to smaller geometries, the firm noted.

Average lithography geometry for global DRAM manufacturing shrunk by a near-term high of 5.6 percent in the first quarter, according to IHS. But that rate of shrinkage will decrease to 5.2 percent in the second quarter, 4.8 percent in the third quarter and 3.7 percent in the fourth quarter, according to the firm's projections. After declining to 2.9 percent in the first quarter of 2012, lithography will shrink in a range of 3.8 percent to 4 percent for the remainder of next year, IHS predicts.

"In the wake of forcefully pursuing lithography reductions in late 2010 and early 2011, the DRAM industry is expected to employ a less aggressive approach to lithography migration throughout the rest of the year," said Dee Nguyen, memory analyst at HIS, in a statement.

Nguyen said DRAM capital expenditures are expected to decline by 30 percent in 2011 compared to 2010, resulting in slower DRAM manufacturing cost reductions for the remainder of 2011 and through 2012.

IHS expects that DRAM cost reductions will speed up again in 2013 as lithography shrinks return due to increased capital spending, Nguyen said. Capital spending by DRAM makers is projected to increase by 23 percent in 2012, which may spur steeper price reductions in 2013, Nguyen said.


IHS, DRAM, Prices, Lithography DRAM price reductions slowing, says IHS