DRAM facing major demand slump in 2011

DRAM manufacturers face a slump in demand during 2011 after a bumper few years, analysts have warned.

Worldwide DRAM revenue in 2011 will fall to $35.5bn (£22.5bn), down 11.8 per cent on last year based on current figures. Demand will continue to fall for the next two years, iSuppli has predicted.

"After the boom year of 2010, the DRAM market is waking up to 2011 with a hangover," said Mike Howard, senior analyst for DRAM and memory at iSuppli.

"With supply exceeding demand, pricing will decline precipitously for the year, causing revenue to decrease."

Production for DRAM modules has increased rapidly, and Samsung is looking to dominate the market. But iSuppli's figures suggest that demand for DRAM will shrink until 2013 and is not expected to return to last year's price levels in the near future.

However, while the retreat in DRAM average selling prices is bad news for suppliers, it augurs well for consumers, Howard explained.

"The price of a 2GB module currently is less than half its level six months ago, a development sure to lead to higher DRAM content in PCs for 2011 and provide consumers with more memory per machine."

Manufacturers are already capitalising on the situation by boosting memory in PCs and servers.