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Showing posts tagged 'dram'


20 October 2021

Memory suppliers to benefit from strong demand and supplier shortages

DRAM

While the downsides to electronic components shortages are well known, business is booming for smaller memory suppliers.

Sales of Samsung DRAM grew 26% in Q2 2021 without meaningful production capacity growth, and as supply-demand imbalances grow, memory suppliers like Samsung, Micron and others are turning to smaller suppliers to fill gaps.

As chip shortages continue, demand grows. Order books get filled off the page, creating longer lead times (up to 40-weeks) and extending standing orders. This is bad news for the end-product manufacturer but great news for suppliers, who see sales rise and bids increase to fuel record turnover and, in some cases, net profits.

The sector as a whole is booming, but no better example of taking the bull by the horns exists than Alliance Memory.  

Alliance Memory is a US-based 30-year old DRAM manufacturer, billed as a legacy SRAM supplier and a leading domestic supplier of DRAM and flash memory. The company’s run rate in 2021 is double what it was in 2020.

In an interview with EPS News, Alliance Memory CEO David Bagby explains why: “we went out to customers struggling to get Samsung. Now we have maybe the best representation of DRAM and SRAM product of anybody out there.”

Memory upturn forecast to continue

IC Insights, the foremost authority on memory and chip demand, has predicted a new record high for memory demand in 2022.

Stronger DRAM pricing is expected to lift total memory revenue 23% in 2021 to $155.2 billion. The memory upturn is forecast to continue into 2022 to $180.4 billion, surpassing the all-time high of $163.3 billion set in 2018.

Demand for memory, including DRAM, SRAM and flash, is being driven by economic recovery and the transition to a digital economy. Unlike other technological cycles, the current cycle of digitalisation has weight behind it, fuelled by innovations in data centres, 5G and space networks, AI, robotics and IoT.

Sequentially, the average price of DRAM rose 8% in the first quarter of 2021. Another increase of 18-23% in Q2 sent memory suppliers into a spin. Demand is outstripping supply, creating a perfect storm for continued price increases.

Price increases expected to continue until late 2022

The price of memory is more sensitive to other electronic components because supply is controlled by a few big players. Smaller memory suppliers fill in gaps in supply, but the big guns like Samsung and Micron rule the roost.

When demand outstrips supply at the big guns, prices explode. We’ve seen it several times before, such as the memory price increase of 2018. Prices fell again in 2019, recovered a little in 2020, then soared again this year.

Memory is a commodity and companies are willing to pay big to get a hold of it. Bidding wars are not uncommon and 40-week lead times are normal today.

However, while the memory upturn is predicted to continue into 2022, Gartner says memory prices will dive at the end of the year, predicting that an “oversupply” of memory chips will develop as demand eases and supply increases.

Tags: electronic components shortages samsung micron chip shortages dram manufacturer sram supplier dram sram flash digital economy


10 February 2021

What does 2021 hold for the electronic components industry?

componentThe coronavirus pandemic hit the electronic components industry like a freight train, knocking supply and demand for six. Now that 2021 is upon us, economies are starting to open up with pinned hopes on vaccines. This could be a banana skin, but 2021 should be a calmer year overall. The world should get back to business.

2021 in a nutshell

The avenues shut down for raw materials and shipments of electronic components will begin to open back up in 2021. This will create a healthier supply and demand market than 2020. Some issues will remain. Component shortages are likely, and this is especially true of newer parts that are found in connected devices.

Semiconductors will lead demand

The semiconductor industry saw a significant increase in global chip demand in 2020 and this will only continue in 2021. Cyclicity driven by 5G and Wi-Fi 6 upgrades and tailwinds like edge computing, AI and AR / VR will fuel demand.

Who will benefit most? Our money is on Broadcom, Arm, Qualcomm, Intel, AMD, Nvidia and Skyworks with TSMC winning on the foundry side.

DRAM will follow the path of semis

Dynamic random access memory (DRAM) is as essential to connected technologies as semiconductors. 2020 saw a sharp increase in recovery from the first quarter, and 2021 will exhibit a similarly healthy supply and demand situation.

Who will benefit most? Samsung, Micron and SK Hynix, who are the first, second and third largest manufacturers of DRAM respectively.

Shutdowns will continue

The risk of shutdowns of component production because of the coronavirus will remain in 2021. This will create extended lead times and supply issues. Governments may be forced to shutdown factories in localised areas.

The good news is this will become less common as the year goes on. The pandemic’s impact on production will reduce over time.

Tailwinds will fuel more demand than cyclicity

When evaluating electronic component demand, cyclicity and tailwinds are often pitched against each other. In 2021, we expect tailwinds like AI, edge computing, robotics and VR / AR to fuel greater growth than cyclical upgrades.

This is a sign of the times. The world is getting more connected and smarter. Innovation will fuel tailwinds and create booming tech sectors.

Counterfeiters will grow more prolific

One of the sad realities of electronic components is counterfeit components. They are becoming more sophisticated. As manufacturers clamber to get stock in this year, they are at a high risk of being targeted by counterfeiters.

Companies should rigorously control purchase sources, conduct quality inspections and use a trusted distribution partner to combat these risks.

Looking to the future

In 2020, the electronic components industry handled the coronavirus pandemic in an efficient and calculated manner. Supply and demand issues hit the industry, but they were solved for the most part in good time.

2021 will be calmer for several reasons: 1) We now have a lived experience of the coronavirus and know how to manage shutdowns efficiently, and 2) There is an increased need for us to get back to work and get on with our lives.

Tags: semiconductors dram electronic components counterfeiters


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