Worldwide Memory Forecast, 3Q03 (Executive Summary) Executive Summary

Transcription

1 Worldwide Memory Forecast, 3Q03 (Executive Summary) Executive Summary Publication Date: 10 September 2003

2 Authors Richard Gordon Andrew Norwood This document has been published to the following Marketplace codes: SEMC-WW-EX-0283 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice

3 Worldwide Memory Forecast, 3Q03 (Executive Summary) Introduction Gartner Dataquest estimates that worldwide memory sales totaled $28.4 billion in Revenue growth occurred in only two markets: dynamic RAM (DRAM) and NAND flash. The markets for static RAM (SRAM), NOR flash, erasable programmable read-only memory (EPROM), electronically erasable programmable read-only memory (EEPROM), mask read-only memory (mask ROM) and other memory all saw revenue declines in In 2003, all four major memory markets DRAM, SRAM, NAND flash and NOR flash will post revenue growth, which will result in total memory revenue reaching $34.3 billion, representing a growth rate of 21 percent over last year We expect a modest increase of 21 percent in memory revenue in 2003, with the DRAM, SRAM and flash markets all forecast to grow and Beyond Consumer and business confidence is recovering as the global economy improves, and this shift in sentiment will result in increased demand for electronic equipment and, by extension, semiconductors. The most important assumption underpinning the next phase in the recovery in the memory market is that a corporate PC replacement cycle will gather momentum, which will result in incremental growth in DRAM megabyte demand. Continued demand from mobile applications for increased code and data storage capability will fuel growth in the NOR and NAND flash markets, while the SRAM market will benefit from the continued shift to feature-rich cellular phone handsets that use higher-density volatile memory devices. Strong demand for removable solid-state storage (RS3) devices has resulted in a NAND flash component shortage that will likely last through the end of the year. NAND flash customers are on "allocation," and pricing has edged upward, which will propel revenue growth in the NAND flash market past 40 percent this year. As demand returns to the semiconductor market, the lack of investment in capacity over the past two to three years will likely create component supply constraints, which in turn will stabilize and firm up device average selling prices (ASPs). Strong demand for semiconductor memory bits and a firm pricing environment will fuel strong revenue growth in 2004 and 2005, taking the market to $47 billion and $60.8 billion, respectively Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1

4 2 Worldwide Memory Forecast, 3Q03 (Executive Summary) We believe the semiconductor industry in general and the memory sector in particular will remain cyclical, and therefore, we have factored into our forecast a supply-side-driven downturn in This forecast downturn reflects the expectation that strong revenue and healthy profits will drive an investment cycle in 2004 and This investment cycle will be centered on 300-mm wafer, 90-nm technology and will bring significant new capacity to the industry in 2006 and 2007, creating a soft price environment for semiconductor components. Detailed short-term and long-term assumptions underlying the forecast statistics are contained in Tables 1 and 2. For the full report, see "Worldwide Memory Forecast, 3Q03," SCSI-WW-MS

5 Worldwide Memory Forecast, 3Q03 (Executive Summary) 3 Table 1 Underlying Memory Forecast Assumptions, Short-Term Outlook Economy/Politics - U.S. GDP growth rises, but fundamentals remain mixed. - European economy continues to struggle. -Globaleconomyimproves, but recovery is noticeably slower than past recoveries. Underlying Market Conditions - Reduced supply helps to increase pricing levels above production costs. - Industry maintains reduced capacity forecast and benefits from strong market. Demand Drivers - Selective corporate PC replacements are apparent in 2003, but a general cycle is not strongly evident until early Worldwide PC unit production growth for 2003 is 7.3 percent, followed by 11.8 percent in U.S.GDPgrowthrises,but fundamentals remain mixed. - European economy continues to struggle. - Global economy improves, but recovery is noticeably slower than past recoveries. - With the exception of the digital cellular handset, weak demand from the communications sector continues to hold back the market in Worldwide digital cell phone handset unit production growth for 2003 is 5.9 percent, followed by 8.7 percent in U.S.GDPgrowthrises,but fundamentals remain mixed. - European economy continues to struggle. - Global economy improves, but recovery is noticeably slower than past recoveries. - Healthy digital cellular handset unit production, coupled with a sharp increase in code storage flash content, continues to drive strong bit growth in Worldwide digital cell phone handset unit production growth for 2003 is 5.9 percent, followed by 8.7 percent in Inhandsets,colorLCD screens, digital cameras, packetized data capability (for example, GPRS) and new applications (for example, Java Applets) are driving a sharp increase in the number of flash bits required for both code and data storage. -U.S.GDPgrowthrises,but fundamentals remain mixed. - European economy continues to struggle. - Global economy improves, but recovery is noticeably slower than past recoveries. - Demand surpassed the ability of the industry to supply in the third quarter of The market will remain undersupplied through 2003 and into Allocation will be a feature of the market through 2003 and into Demand for digital consumer electronics and the installed base of PCs continues to drive the proliferation of removable solid-state storage devices (for example, flash cards and USB flash drives) for data storage and transfer.

6 4 Worldwide Memory Forecast, 3Q03 (Executive Summary) Table 1 (Continued) Underlying Memory Forecast Assumptions, Short-Term Outlook Density Transition - The move to the 512Mb density will be modest. The 256Mb device will remain the largest-shipping density through 2003 and New Technology - The move to DDR 400 SDRAM devices will be uneventful. Demand for DDR- II SDRAM will be insignificant until the end of RDRAM will account for less than 3 percent of the market during Its price premium over DDR SDRAM will fall. Production and Investment - DRAM vendors stick to reduced production plans and benefit from improving pricing conditions. - Increasing device density requirements in the handset fuel a shift from 4Mb and 8Mb low-powersramto16mb and 32Mb pseudo SRAM. - In the synchronous SRAM arena, variants such as DDR, QDR and sigma RAM are being targeted at high-speed, high-bandwidth applications such as networking. - Leading SRAM vendors shift production to the 0.13-micron process node to reduce cost and increase device performance. - The move to higher densities is continuing apace. 64Mb will be the highest-volume shipping density in MLC technology is gaining share of bit shipments as Intel pushes StrataFlash into the handset market. - MBC technology, typically based on a nitride process, is being introduced and ramped to volume production in 2003 (for example, Advanced Micro Devices' MirrorBit). - Multichip packaged devices (incorporating more than one NOR flash die or SRAM, pseudo SRAM, and DRAM die) are commonplace and are featured in an increasing number of new cell phone designs. - The move to MLC and MBC technology by leading NOR flash vendors will increase bit supply in The move to higher densities is continuing apace. 256Mb will be the highest-volume shipping density in 2003, with the 512Mb taking a higher market share in Samsung and Toshiba introduce MLC technology to enable very high density product offerings (for example, 512Mb and above). - Leading vendors will shift production to the 0.11-micron process node during 2003 and New vendors plan to enter the market in 2004 (for example, the announced joint venture between Hynix and STMicroelectronics).

7 Worldwide Memory Forecast, 3Q03 (Executive Summary) 5 Table 1 (Continued) Underlying Memory Forecast Assumptions, Short-Term Outlook Pricing - Price rises seen late in the first half of 2003 are maintained through the second half because of the usual seasonal increase in demand. - In the first quarter of 2004, pricing falls sharply before experiencing mild quarterly declines for the remainder of the year. - Sluggish electronic equipment production across the board will continue to hold back SRAM demand and keep downward pressure on ASPs during As2004progresses, improved electronic equipment production levels will increase demand for SRAM devices, resulting in an improved pricing environment. -MuchofNORflashshipment volume (for example, sales to the cell phone handset sector) are covered by long-term agreements, and thus, pricing of high-density devices is relatively stable. Prices are expected to improve across the board in 2004 as continued strong demand helps to burn off overcapacity. -Demandwillcontinuetooutstrip supply in the second half of 2003, keeping prices firm. - In 2004, additional capacity brought on line by established vendors and new market entrants will resume the downward pressure on prices. DDR = Double data rate GDP = Gross domestic product GPRS = General packet radio service LCD = Liquid crystal display Mb = Megabit MBC = Multibit per cell MLC = Multilevel cell QDR = Quad data rate RDRAM = Rambus dynamic RAM SDRAM = Synchronous dynamic RAM USB = Universal Serial Bus Source: Gartner Dataquest (August 2003)

8 6 Worldwide Memory Forecast, 3Q03 (Executive Summary) Table 2 Underlying Memory Forecast Assumptions, Long-Term Outlook Economy/Politics - A recovering global economy beginning in 2004 will lead to increased consumer spending and increased capital spendingbybusinessesin2005. Underlying Market Conditions - A corporate PC replacement cycle will result in a healthier market for DRAM in 2004 and Further industry consolidation around three or four major vendors may be necessary to sustain a viable market. Demand Drivers - As the PC sector becomes a replacement market, the lack of a "killer" application for DRAM will inhibit bit growth in the long term. -LowpowerDRAMbeginsto penetrate the market with the adoption of high-end mobile terminals. Density Transition - The highest-volume shipping device density is forecast to be 1Gb by Module granularity concerns may dictate the speed of density transitions and product mix by configuration (x8, x16 and x32) at any given time. - A recovering global economy beginning in 2004 will lead to increased consumer spending and increased capital spendingbybusinessesin Integration of low-density SRAM(upto8Mb)intosystem-on-a-chip designs is likely to cannibalize the market for discrete components. - Replacement of higher-density asynchronous SRAM (16Mb and greater) by lowpower DRAM will hold back bit growth. - A return to healthier levels of production of networking equipment will drive the market for high-speed synchronous SRAM. -Themarketwillremainfragmented, with significant annual unit shipment volumes of device densities ranging from 1Mb to 64Mb. - The highest-volume shipping device density is forecast to be 16Mb by A recovering global economy beginning in 2004 will lead to increased consumer spending and increased capital spendingbybusinessesin generation and third-generation mobile handsets are rolled out, enabling compelling data-centric mobile applications. - The convergence of mobile applications, such as handsets, PDAs, cameras and Internet audio players, will continue, driving demand for code and data storage flash bits. - The highest-volume shipping device density is forecast to be 256Mb by A recovering global economy beginning in 2004 will lead to increased consumer spending and increased capital spending by businesses in Despite rapid expansion in terms of megabytes, the market will remain fiercely competitive, with any sign of price stability likely to attract new market entrants. - Accelerated cost-per-bit reduction will be the norm, so that bit growth will continue in the face of retail channel pricing dynamics. - Removable data storage devices will become ubiquitous. -Anincreasingnumberofcell phone handsets will have a slot for a removable data storage device. - NAND flash is likely to struggle as a competitive technology in code execution applications. - The highest-volume shipping device density is forecast to be 2Gb by 2007.

9 Worldwide Memory Forecast, 3Q03 (Executive Summary) 7 Table 2 (Continued) Underlying Memory Forecast Assumptions, Long-Term Outlook New Technology - MRAM could emerge as a viable universal memory technology to pose a competitive threat to DRAM. Production and Investment - Strengthening market conditions in 2004 and 2005 will lead to improved semiconductor industry profitability, which, in turn, will lead to increased capital expenditure. - A supply-side-driven downturn is forecast in Pricing - The pricing environment is forecast to be more favorable for memory vendors in 2004 and 2005, as pent-up demand will hit the market in the face of tight capacity. Gb = Gigabit MRAM = Magnetic RAM Source: Gartner Dataquest (August 2003) - MRAM could emerge as a viable universal memory technology to pose a competitive threat to SRAM. - Strengthening market conditions in 2004 and 2005 will lead to improved semiconductor industry profitability, which, in turn, will lead to increased capital expenditure. - A supply-side-driven downturn is forecast in The pricing environment is forecast to be more favorable for memory vendors in 2004 and 2005, as pent-up demand will hit the market in the face of tight capacity. - MRAM could emerge as a viable universal memory technology to pose a competitive threat to NOR flash. - Strengthening market conditions in 2004 and 2005 will lead to improved semiconductor industry profitability, which, in turn, will lead to increased capital expenditure. - A supply-side-driven downturn is forecast in The pricing environment is forecast to be more favorable for memory vendors in 2004 and 2005, as pent-up demand will hit the market in the face of tight capacity. - MRAM could emerge as a viable universal memory technology to pose a competitive threat to NAND flash. - Strengthening market conditions in 2004 and 2005 will lead to improved semiconductor industry profitability, which, in turn, will lead to increased capital expenditure. - A supply-side-driven downturn is forecast in The pricing environment is forecast to be more favorable for memory vendors in 2004 and 2005, as pent-up demand will hit the market in the face of tight capacity.