Tracking The Demand Cycle for Memory: DRAM & NAND

DRAM demand remains stable in a gradually weakening pricing environment

. We note that pricing for DDR3 DRAM has been weakening gradually over the last three months after rising sharply early in 2010, driven by strong demand in PCs and servers, coupled with restrained capacity additions. We note that DRAM bit demand is likely to grow at 50-60% in 2010 and 2011, while capacity additions will likely trail behind due to consolidation in the industry, lack of access to cheap capital, and lessons learned from the 2008 market collapse, in our opinion. We note that we believe the Windows 7 PC upgrade cycle and the server upgrade cycle driven by low-power, virtualization, and multi-core CPU technology from Intel and AMD are likely to be positive factors in DRAM demand through 2011/2012.

Flash Memory Demand remains strong with new applications. The advent of new consumer devices such as smart phones with significant amounts of embedded flash storage and removable flash cards, iPAD-like Web tablets, solid-state drives, high-density iPOD-like music/video players, etc. is likely to continue driving flash memory bit demand by 70-80% per year, while capacity is likely being added at a lower clip of 50-60% per year.

Channel checks with key OEMs, including HP, Dell, Cisco, IBM, and other industry sources support our thesis. We found growing momentum fora few select companies we follow who haveadvanced memory solutions for blade servers, workstations, printers, embedded control/display applications, and next-generation networking equipment due to, in our view, superior module engineering design, high levels of customization, faster time to market with greater flexibility than the competition, and strong logistics services. Furthermore, our channel checks with HP, Dell, and Cisco on new design wins for these companies are very positive, especially for next-generation server and networking designs, which use higher-performance memory modules.

Many believe flash memory solid-state drive products gaining momentum. In addition to the company's core strengths in embedded/industrial flash drive applications with the Adtron acquisition, we believe SMOD is gaining momentum in the enterprise solid-state drive market with PCI Express SSDs and SATA/SAS drives. SMOD management indicated a couple of major d

Tracking The Demand Cycle for Memory: DRAM & NAND

By: Ronald Russo

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