Samsung became the only top five DRAM supplier to achieve revenue growth in the third quarter iSuppli said.
The giant secured its place as DRAM dominator selling $4.4 billion worth of DRAM in the third quarter, up 14.3 percent from $3.8 billion in the second quarter. In contrast the next four largest suppliers all suffered sequential declines in revenue, which again boosted Samsung with the company’s share of the market in the third quarter surging to 40.7 percent. This was up from 35.4 percent in the previous quarter.
The research company said that Samsung’s double-digit growth was “all the more remarkable” given that overall DRAM market revenue in the third quarter actually declined slightly to $10.72 billion, down 0.6 percent from $10.78 billion.
“Samsung has been vocal about its desire to expand its DRAM market share to as high as 50 percent,” said Mike Howard, senior analyst for iSuppli. “The third-quarter results show Samsung has put its money where its mouth is. By investing heavily in expanding production and advancing its manufacturing technology, the company has been able to cut pricing and to eat into the market share of its competitors.”
And things are only getting better for Samsung with iSuppli saying that it expects Samsung to continue to gain share in 2011 as it presses its market-share campaign. In fact, its only problem may be how much share its largest PC OEM customers will allow it to take. There’s also the problem of how long the company can continue to cut prices and how much it can increase its dominance before government regulators raise anti-competitive concerns, Howard said.
The DRAM industry faces a very challenging 2011. Not only do other manufacturers need to advance their manufacturing technology as aggressively as Samsung—an expensive and technically difficult task—they must also keep wafer output at current levels at the very least, iSuppli said.
As prices continue their descent, some manufacturers could also find their production costs rising above their average selling prices.
“It looks like the DRAM industry could very well be heading for consolidation, with some competitors being acquired or getting forced from the market,” Howard added.
One DRAM player singled out by iSuppli for failing in this quarter was Micron Technology, which posted the worst performance among the Top 5 DRAM suppliers, with a revenue of $1.1 billion, down 21.4 percent from $1.4 billion in the second quarter. While the company maintained the No. 4 market position, its share fell to 10.5 percent, down from 13.3 percent in the second quarter.
iSuppli put this down to production challenges at its Inotera facility. However, it’s not all bad news with the company predicting that Micron will not lose further market share in 2011 and might actually expand its position slightly. It said Micron’s DRAM wafer production will grow in 2011 due to the significant uptick in utilisation anticipated at Inotera.
After Samsung, the next best performance among the Top 5 DRAM suppliers was posted by fellow South Korean semiconductor supplier Hynix Semiconductor, which saw its revenue dip by just 2.9 percent to $2.25 billion, down from $2.31 billion in the second quarter.