DRAMeXchange says DRAM market topped $10 billion in Q2

The worldwide market for DRAMs exceeded $10 billion in Q2 according to David Manners who reports in Friday’s Electronics Weekly on a release from DRAMeXchange. The “precise” sales figure was $10.7 billion, which was a whopping 15% increase over Q1’s $9.3 billion. So far, this has been a good year for DRAM makers, which was reinforced by the excellent attendance (standing room only) and the upbeat semiconductor memory news at last week’s MemCon held in Silicon Valley. The report also notes that DDR2 SDRAM production was significantly lower during Q2, confirming the sea change from DDR2 to DDR3 SDRAM in the major DRAM markets: PCs and servers.

The report also notes a smooth transition to 56nm and 46nm DRAM production, which is significant because it means that DRAM manufacturers are now fully entering the realm of immersion lithography--the realm that logic IC vendors have been in for several years. What’s significant about that? I didn’t realize it until last week’s MemCon, but entering the immersion lithography realm means that you can only buy mask steppers from one vendor: ASML, headquartered in the Netherlands. Not coincidentally, if you cruise over to ASML’s Web site (www.asml.com), you’ll see that the company’s stock has done quite well over the past few months. It’s good to be the king.

However, lest you think that all was chocolate and roses at last week’s MemCon, the seeds are already and obviously being sewn for the next memory downturn. After a long period of low capital expenditures, memory-vendor capex is significantly up now that we have boom times. Increased capex invariably leads to oversupply somewhere down the line. So while blue skies are shining today, we (those of us who attended MemCon 2010) can already see the dark clouds gathering on the far horizon. You would think that forewarned is forearmed, but it isn’t so and it can’t be so. Many other large industries that depend on large capital expenditures also exhibit this boom/bust cycle including the early railroad and today’s airline industries. The time lag between rising revenues and the much slower ability to make large capital expenditures ensures that industries that live and die on large capex investments are always out of phase with their markets. Seems like an interesting business case study set in the making here.