Worldwide Memory Forecast, 1Q03 (Executive Summary) Executive Summary

Transcription

1 Worldwide Memory Forecast, 1Q03 (Executive Summary) Executive Summary Publication Date: 13 March 2003

2 Authors Richard Gordon Andrew Norwood This document has been published to the following Marketplace codes: SEMC-WW-EX-0208 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice

3 Worldwide Memory Forecast, 1Q03 (Executive Summary) Introduction Worldwide memory sales reached $30 billion in 2002, but revenue growth was seen only in the dynamic RAM (DRAM) and NAND flash markets. The markets for static RAM (SRAM), NOR flash, erasable programmable read-only memory (EPROM), electronically erasable programmable read-only memory (EEPROM), mask read-only memory (ROM) and other memory all saw revenue declines in In DRAM, although annual bit growth, at 44 percent, hit a historic low, revenue growth was driven by a firmer pricing environment in the first half of the year. In NAND flash, the reverse was true, with revenue growth fueled by strong annual bit growth, despite steep price declines. In SRAM, continued weakness, particularly in the wired communications sector, held back the market. In NOR flash, sales in 2002 were about flat compared with 2001, as steady downward pricepressuresthroughouttheyearinhibitedrevenuegrowth.themarketsfor EPROM and mask ROM sank below $400 million, as demand for these legacy technologies suffered because of generally weak electronic equipment production in a soft global economy. Similarly, a weak global economy and its effect on electronic equipment manufacturing adversely impacted the market for EEPROMs. The outlook for memory sales in 2003 is for improved market conditions in the second half of the year as global geopolitical tensions (such as the Middle East conflict) and sluggish economic growth give way to improved consumer and business confidence, positively impacting consumer and corporate IT spending. We expect modest growth of 23 percent in memory sales in As demand returns to the semiconductor market, the lack of investment in capacity over the past two to three years will likely create component supply constraints, which, in turn, will act to stabilize and firm device average selling prices (ASPs). Strong demand for semiconductor memory bits and a firm pricing environment will fuel strong revenue growth in 2004 and 2005, taking the market to $54 billion and $68 billion, respectively. We believe that the semiconductor industry, in general, and the memory sector, in particular, will remain cyclical and, therefore, we have factored into our forecast a supply-side driven downturn in This forecast reflects the expectation that strong revenue and healthy profits will drive an investment cycle in 2004 and This investment cycle will be centered on 300-millimeter (mm) wafer, 90-nanometer (nm) technology and will bring significant new capacity to the industry in 2006 and 2007, creating a soft price environment for semiconductor components. Detailed short-term and long-term assumptions underlying the forecast statistics are contained in Tables 1 and 2. For the full report, see the Gartner Dataquest Market Statistics "Worldwide Memory Forecast, 1Q03," SCSI-WW-MS Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1

4 2 Worldwide Memory Forecast, 1Q03 (Executive Summary) Table 1 Underlying Memory Forecast Assumptions, Short-Term Outlook Underlying Market Conditions The possibility of further dramatic industry consolidation recedes, and vendors return to a market share battle during the first half of The industry sees a slight rebound during the late third quarter of 2003, but after the holiday season build is over, the market once again slips into oversupply. Demand Drivers Worldwide PC unit shipment growth for 2003 is 7.8 percent, followed by 11.5 percent in The introduction of the Springdale chipset and the requirement for two banks of memory modules leads to a 40 percent increase in DRAM content per PC. Density Transition The move to 512Mb density will be modest. The 256Mb density will remain the highest-volumeshipping density though 2003 and With the exception of the digital cellular handset, weak demand from the communications sector continues to dog the market in Worldwide digital cellular phone handset unit production growth for 2003 is 5 percent, followed by 11 percent in Increasing device density requirements in the handset fuels a shift from 4Mb and 8Mb low-powersramto16mband 32Mb pseudo SRAM. Healthy digital cellular handset unit production, coupled with a sharp increase in flash content, continues to drive strong bit growth in Worldwide digital cell phone handset unit production growth for 2003 is 5 percent, followed by 11 percent in In handsets, color LCD screens, digital cameras, packetized data capability (for example, GPRS) and new applications (such as Java Applets) drive a sharp increase in the number of flash bits required for both code and data storage. Themovetohigherdensitiesis continuing apace. The 64Mb density will be the highest-volume-shipping density in 2003 and Despite the limited supplier base and a boom in demand for data storage bits, the market will remain fiercely competitive in Demand for digital consumer electronics continues to drive the proliferation of removable solid state storage devices (for example, flash cards and USB drives) for data storage and transfer. Themovetohigherdensitiesis continuing apace. The 256Mb density will be the highest-volume-shipping density in 2003 and 2004.

5 Worldwide Memory Forecast, 1Q03 (Executive Summary) 3 Table 1 (Continued) Underlying Memory Forecast Assumptions, Short-Term Outlook New Technology The move to DDR 400 SDRAM devices will be relatively smooth. Demand for DDR II SDRAM will not be significant until the end of RDRAM will account for less than 5 percent of the market during RDRAM price premiums over DDR SDRAM will be reduced. Production and Investment Elpida is taking over Mitsubishi's DRAM operation in the first half of ProMOS will continue DRAM production despite Infineon's legal attempts to stop it. Hynix's attempt to remain independent means much-needed industry consolidation is not likely to be achieved during the first half of DRAM vendors are putting off major investments in the first half of Increasing device density requirements in the handset fuels a shift from 4Mb and 8Mb low-powersramto16mband 32Mb pseudo SRAM. Leading SRAM vendors are shifting production to the micron process node to reduce costs and increase device performance. MLC technology is gaining share of bit shipments as Intel pushes StrataFlash into the handset market. MBC technology, typically based on a nitride process, is introduced and ramped to volume production in 2003 (for example, AMD MirrorBit). Multichip package devices (incorporating more than one NOR flash die or SRAM, pseudo SRAM and DRAM die) are commonplace and are featured in an increasing number of new cell phone designs. ThemovetoMLCandMBC technology by leading NOR flash vendors will increase bit supply in Samsung and Toshiba introduce multilevel cell (MLC) technology to enable very high-density product offerings (such as 512Mb and above). Samsung is significantly increasing investment in NAND flash production capacity. New vendors, such as Hynix, are evaluating entry into the market.

6 4 Worldwide Memory Forecast, 1Q03 (Executive Summary) Table 1 (Continued) Underlying Memory Forecast Assumptions, Short-Term Outlook Pricing During the first half of 2003, DDR SDRAM pricing will likely fall to SDRAM levels and remain there. In the fourth quarter of 2003, pricing is forecast to make a small recovery as seasonal demand increases. Sluggish electronic equipment production across the board will continue to hold back SRAM demand and keep downward pressure on ASPs during Much of NOR flash shipment volume (that is, sales to the cell phone handset sector) are covered by long-term agreements and, thus, pricing of high-density devices is relatively stable. To meet increased demand, NOR flash vendors shift production to high-density devices, which could lead to firmer prices for low-density devices in Fierce competition between Samsung and Toshiba for market shareandthereductioninretail price points for flash cards will keep NAND flash ASPs under downward pressure during ASP = Average selling price DDR = Double data rate GPRS = General packet radio service LCD = Liquid crystal display Mb = Megabit MBC = Multibit per cell MLC = Multilevel cell RDRAM = Rambus dynamic RAM SDRAM = Synchronous dynamic RAM USB = Universal Serial Bus Source: Gartner Dataquest (March 2003)

7 Worldwide Memory Forecast, 1Q03 (Executive Summary) 5 Table 2 Underlying Memory Forecast Assumptions, Long-Term Outlook Underlying Market Conditions A corporate PC replacement cycle will result in a healthier market for DRAM in 2004 and Further industry consolidation around three or four major vendors may be necessary to sustain a viable market. Demand Drivers As the PC sector becomes a replacement market, the lack of a killer application for DRAM will inhibit bit growth in the long term. Density Transition The highest-volume-shipping device density is forecast to be 1Gb by Module granularity concerns may dictate the speed of density transitions and product mix by configuration (x8, x16 and x32) at any given time. New Technology MRAM could emerge as a viable universal memory technology, posing as a competitive threat to DRAM. Production and Investment Strengthening market conditions in2004and2005willleadto improved semiconductor industry profitability, which, in turn, will lead to increased CAPEX. A supply-side driven downturn is forecast in Integration of low-density SRAM (up to 8Mb) is likely to cannibalize the market for discrete components. Replacement of higher-density asynchronous SRAM (16Mb and greater) by DRAM will hold back bit growth. A return to healthier levels of production of networking equipment will drive the market for high-speed synchronous SRAM. The market will remain fragmented, with significant annual unit shipment volumes of device densities ranging from 1Mb to 64Mb. The highest-volume-shipping device density is forecast to be 16Mb by MRAM could emerge as a viable universal memory technology, posing as a competitive threat to SRAM. Strengthening market conditions in2004and2005willleadto improved semiconductor industry profitability, which, in turn, will lead to increased CAPEX. A supply-side driven downturn is forecast in G and 3G mobile handsets are rolled out, enabling compelling data-centric mobile applications. The convergence of mobile applications, such as handsets, PDAs, cameras and Internet audio players, continues to drive demand for code and data storage flash bits. The highest-volume-shipping device density is forecast to be 256Mb by MRAM could emerge as a viable universal memory technology, posing as a competitive threat to NOR flash. Strengthening market conditions in 2004 and 2005 will lead to improved semiconductor industry profitability, which, in turn, will lead to increased CAPEX. A supplyside driven downturn is forecast in Despite rapid expansion in megabyte terms, the market will remain fiercely competitive, with any sign of price stability likely to attract new market entrants. Accelerated cost-per-bit reduction will be the norm to continue to drive bit growth in the face of retail channel pricing dynamics. Removable data storage devices will become ubiquitous. NAND flash is likely to struggle as a competitive technology in code execution applications. The highest volume shipping device density is forecast to be 1Gb by MRAM could emerge as a viable universal memory technology, posing as a competitive threat to NAND flash. Strengthening market conditions in 2004 and 2005 will lead to improved semiconductor industry profitability, which, in turn, will lead to increased CAPEX. A supplyside driven downturn is forecast in 2006.

8 6 Worldwide Memory Forecast, 1Q03 (Executive Summary) Table 2 (Continued) Underlying Memory Forecast Assumptions, Long-Term Outlook Pricing The pricing environment is forecast to be more favorable for memory vendors in 2004 and 2005 as pent-up demand hits the marketinthefaceoftightcapacity. The pricing environment is forecast to be more favorable for memory vendors in 2004 and 2005 as pent-up demand hits the marketinthefaceoftightcapacity. The pricing environment is forecast to be more favorable for memory vendors in 2004 and 2005 as pent-up demand hits the market in the face of tight capacity. The pricing environment is forecast to be more favorable for memory vendors in 2004 and 2005 as pent-up demand hits the market in the face of tight capacity. 3G = Third generation CAPEX = Capital expenditure Gb = Gigabit MRAM = Magnetic RAM Source: Gartner Dataquest (March 2003)