IC Insights: The global DRAM market is expected to decline by 18% in 2022

The DRAM market typically sees strong sales in the second half of the year, as system makers order memory chips for new generations of products they plan to release during the year-end holidays. But that hasn't happened this year.

Weak economic conditions and high inflation have slowed global demand for personal computers, mainstream smartphones and other consumer electronics, according to semiconductor data consultancy IC Insights. As a result, DRAM demand is on a downward spiral, with sales now expected to decline by 40% to $29.3 billion in the second half of 2022, compared to $49 billion in the first half of 2022. The DRAM market is expected to decline by 18% in 2022 as a whole.

The DRAM market saw strong sales in the first few months of this year, but the first signs of a DRAM market correction began to appear in late 2Q22. Micron, for example, reported an 11% increase in sales in its third quarter of FY22 (ended May). But then the company gave sales guidance of -17% for its fiscal fourth quarter (ended in August). Micron's actual sales in the fourth quarter of 2022 were down 23%, much higher than its forecast. Later this year, Micron also said it expects its annual DRAM bit volume to decline by 1%, further evidence that the DRAM market is rapidly and severely downturning.

SK Hynix and Samsung also announced a sharp decline in their memory sales in 3Q22, and both expect the DRAM market weakness to continue until the end of this year, at least until 1Q23.

The three memory makers noted on earnings calls that inflation has sapped consumers' discretionary spending at a time of the year when sales typically heat up. Coupled with ongoing supply chain disruptions and bloated inventory levels, a DRAM market correction is almost inevitable.

Over the past 30 years, the DRAM market has been characterized by periods of astonishing growth and multi-year downturns (such as 2022) with high volatility.

IC Insights pointed out that in the past four years alone, the DRAM market has declined by 37% in 2019, increased by 42% in 2021, and is expected to decline by 18% in 2022. With such extreme volatility, it's no wonder that the number of DRAM suppliers in this number has dwindled from just over 25 30 years ago to just three today.