DRAM bit volume to grow 17%

DRAM bit volume will grow roughly 20% per year over the next few years, forecasts IC Insights. Figure 1 shows Micron’s perspective on the capex required to increase DRAM bit volume shipments 20% per year.

With new and very complex DRAM technologies requiring much more fab equipment and more fab space needed to house this equipment, Micron estimates that the industry capex required to grow DRAM bit volume by 20% more than doubled from $8 billion in 2015 to $18 billion in 2018.

Actual DRAM expenditures in 2016 were slightly below what was needed to increase bit volume 20% and about equal to what was needed in 2017.

However, in 2018, capex targeting the DRAM market reached $23.7 billion, 32% more than the $18.0 billion that was deemed necessary to grow DRAM bit volume by 20%.

In 2018, DRAM bit volume increased only 13% and is forecast to increase 17% in 2019.

Too much capex spending typically leads to overcapacity and subsequent pricing weakness—a condition that is amplified by economic weakness and softer demand from end-users.

With Samsung, SK Hynix, and Micron aggressively spending to upgrade/add DRAM capacity last year, and with economic and trade uncertainties continuing to permeate global markets, IC Insights believes that the risk of too much DRAM capacity and the subsequent pricing weakness that results will continue for the remainder of 2019.

Actual DRAM capex spending in 2019 is forecast to be less than what is required to maintain 20% bit volume growth.

That could offset the overspending in 2018 and help start a return to supply-demand balance within the DRAM market in 2020.