Graphics memory industry to decline as graphics integrated with CPUs

The graphics memory industry is expected to see its share of the DRAM market decline over the next few years due to an accelerated trend towards integrating graphic capabilities into CPUs for PCs.

The industry is expected to grow only slightly at the beginning of next year, making up 5 percent of the overall market for memory in the first quarter of 2011.  According to iSuppli, the industry will begin its decline in the final quarter of 2011 before seeing its market share reduce to 4.4 percent in 2014.

The reason for the decline is that, while high-end graphics will still require a dedicated video card with advanced memory in order to support gaming and similar activities, the majority of functions required by most users do not seek such functionality.

An integrated approach where graphic functionality is embedded into a motherboard and utilises the system memory found in a computer is expected to be adequate for the majority of tasks.

“While graphics memory commands a price premium and is more stable in demand compared to commodity DRAM, the market is not projected to grow dramatically in the future,” said Mike Howard, senior analyst for DRAM at iSuppli. “In the coming years, demand for graphic memory will ease as manufacturing trends favour the integration of the graphic processing unit (GPU)—the microprocessor responsible for rendering 2-D or 3-D images—into a computer’s CPU.”

iSuppli notes that Japanese firm Elpida is beginning the production of memory technology specific to graphics known as GDDR3 and GDDR5.  While Elpida may have only a small share at the moment it is expected to shake up the industry. iSuppli predicts that firms such as Samsung and Hynix may be forced to surrender market share.

It is also expected that while graphics memory will continue to be demanded by game-console makers and high-end graphics cards, the appearance of integrated products could threaten the GPU market.

With the release of Intel’s Sandy Bridge platform for integrated graphics by Intel next year, such disruption looks increasingly likely.