The global DRAM market consists of various global and local manufacturers that are continuously developing new technology based on DRAM for global expansion to solidify their market position. The manufacturers compete on the basis of cost, product quality, and technology in the DRAM market. DRAM is used in various applications mainly personal computers (PCs) and servers. Moreover, the growing adoption of high-end smartphones is fueling the DRAM market growth, leading to the development of new products according to the end-use requirements. Various other applications use DRAM such as smartphones, tablets, digital signal controller (DSC), global positioning systems (GPS), tablets, and pads. Moreover, consumer electronics utilize DRAMs in digital cameras, portable media players, set-top boxes, video cards, smart TVs and others and offer low power consumption. Similarly, other computer equipment requiring DRAM as a basic component include routers, switches, networking devices, servers, memory, and storage.
The companies are primarily focusing on new product development. Various key players in the market such as Samsung Electronics Co., Ltd, SK Hynix Inc., Micron Technology, Inc., Nanya Technology Corporation and others are developing DRAM memory products based on the capacity and specifications required in devices and servers. In October 2018, ADATA Technology Co., Ltd. launched GAMMIX D30 DDR4 memory module which offers high performance with a speed of up to 4600MHz and supports Intel X299 2666MHz and AMD AM4 / Ryzen platforms.
The improvement of the global economic scenario combined with technological advancement in the emerging economies like India, South Africa, China, Brazil, Argentina, and others is likely to fuel the market growth, making it an ideal time to expand DRAM market geographically and increase the global market share.
Samsung Electronics Co., Ltd. is a major key player in the DRAM market due to presence of various research and development facilities and operational units. The company invests in the development of new facilities for semiconductor manufacturing to increase the production. In 2017, the company invested ~USD 18 billion to expand the production capacity of its unit in South Korea. Some of the categories of DRAM memory are DDR3, HBM Aquabolt, and GDDR6, GDDR5 among others.
SK Hynix Inc. is a global manufacturer of semiconductor products. It is headquartered in South Korea and operates globally. The company hold second position in the DRAM market globally. There are various categories of DRAM memory that the company offers such as LPDDR3, Module, GDDR6 SDRAM, GDDR5 SDRAM and others. In 2018, the company invested ~USD 3 billion in DRAM products manufacturing plant, leading to the expansion of its product portfolio and production capacity.
Micron Technology, Inc. is a US-based company that manufactures and sells memory products and storage solutions internationally. The company holds the third position in the DRAM market. In 2018, the company announced an investment of USD 3 billion in its semiconductor manufacturing plant in Manassas, Virginia, US. The investments are made to increase the production capacity and diversify its product portfolio.
Winbond Electronics Corporation is a Taiwan-based company that manufactures, designs, and sells integrated circuits (ICs) manufactured with very-large-scale integration (VLSI) for microelectronic applications. In 2017, the company invested ~ USD 226 million in new product development and innovation. The company manufactures various categories of DRAM memory such as Mobile DRAM and Speciality DRAM
Conclusively, to increase their stability in the market, key players are required to increase the investments in research and development to enhance the performance of the existing products and leverage innovation in technology to meet the application demand.
Threat of New Entrant
The threat of new entrants in the DRAM industry is low due to extremely high capital requirement, economies of scale, and cross-patent agreements by established players.
The two vital stages for creating value from cost leadership and differentiation are design and fabrication. Both these stages require huge capital investments. Also, there is a need for highly skilled workforce which adds to the overall cost. As a result, the high capital investment makes the barriers to entry high. Moreover, economies of scale is also a challenge for new entrants as the industry demands large-scale production for them to gain a cost advantage. Furthermore, the DRAM industry has a significant number of cross-licensed agreements that pose a high barrier to the new entrants. For instance, the patent licensing agreement of October 2018 between Rambus and Phison. In the agreement, Rambus licensed Phison to use a wide range of innovations in the Rambus patent portfolio.
Bargaining Power of Supplier
DRAM market is cyclic, therefore, the supply lead times decide the revenue for the DRAM providers. The equipment quality and the supply lead times are the key factors for developing and producing new generations of DRAM. Furthermore, due to the high order cancellation cost and market consolidation, there is high vendor lock-in and the switching cost for buyer is also very high. As a result, the bargaining power of suppliers is likely to remain high in the DRAM industry during the forecast period.
Bargaining Power of Buyers
The end-users of DRAM are consumer electronics manufacturers that cover almost 70 to 80 % of the DRAM market. The end-users are corporate customers whose end-product largely depend on the supply of DRAM chips. Therefore, the bargaining power of buyer is expected to remain moderate in the years to come.
Threat of Substitute
For DRAM, the threat of a substitute is quite low because the likelihood of the availability of a substitute with the exact same function is almost negligible. Although technological change is continuous with the entry of substitute products such as phase-change memory. However, the fundamental limitation of these products restricts it from replacing the DRAM chip during the forecast period. Furthermore, the buyer’s propensity for the substitute is very low.
Intensity of Rivalry
The industry is growing at a significant rate. Over the past decade, the market has been consolidated by established players. A few active vendors in the market account for a cumulative market share of more than 70%. Furthermore, there is intense competition among the players in the market, with the vendors investing heavily in extensive research and development to make advancement in the technology, resulting in high degree of rivalry in the market.
