PC share of DRAM market falls below 50 percent for the first time

Has the technology industry entered the post-PC era? New figures from IHS iSuppli suggest it has as they show that during the second quarter of 2012 personal computers accounted for less than half of the market for DRAM, the first time in a generation that they didn’t consume the majority of the leading type of semiconductor memory. PCs in the second quarter accounted for 49.0 of DRAM bit shipments, down from 50.2 percent in the first quarter, according to the latest IHS iSuppli DRAM Dynamics Brief.

The share of PCs hasn’t dipped below 50 percent since the 1980s, when personal computers were a new product whose sales were rising at rapid clip which makes this all the more remarkable. After accounting for the overwhelming share of DRAM buying for decades, average PC share from the first quarter of 2008 until the fourth quarter of 2011 hovered at approximately 55 percent, with share fluctuating periodically but generally trending down.

This event highlights the decline of the PC market because of the impact of smartphone and media tablets. However, beyond symbolism, the development also illustrates the diminishing dominion of PCs in the electronics supply chain.

“The arrival of the post-PC era doesn’t mean that people will stop using personal computers, or even necessarily that the PC market will stop expanding,” said Clifford Leimbach, memory analyst at IHS. “What the post-PC era does mean is that personal computers are not at the centre of the technology universe anymore and are seeing their hegemony over the electronics supply chain erode. PCs are no longer generating the kind of growth and overwhelming market size that can single-handedly drive demand, pricing and technology trends in some of the major technology businesses.”

The fact that PCs have lost their majority share of the DRAM market, an area completely defined and dominated by personal computers for about 30 years, represents a major milestone and the arrival of a new era in technology.

“For DRAM suppliers, the focus in the future increasingly will be on serving the needs of fast-expanding new markets for smartphones and tablets, at the expense of catering to the PC business,” Leimbach said. “This follows other indications of the waning influence of the PC business in the electronics business. Such factors include the declining power of the Wintel alliance, as well as Apple’s smartphone and tablet-driven ascendency to chip purchasing leadership above traditional PC-oriented frontrunners like Hewlett-Packard.”

During the period from the second quarter of this year to the fourth quarter of 2013, the portion of DRAM shipments accounted for by PCs is expected to contract by another 6 percentage points, sliding to 42.8 percent.

In comparison, the share held by media tablets will continue to rise. Tablet share of the DRAM space in terms of bit shipments grew to 2.7 percent in the second quarter, up from 1.6 percent in the first quarter, and will gradually expand by 4 percentage points until it hits 6.9 percent by the fourth quarter next year.

Meanwhile, cellphones will experience even faster growth, with their share of DRAM bits rising to 19.8 percent in the fourth quarter of 2013, up nearly 7 points from 13.2 percent in the second quarter of 2012.

The combined share in the fourth quarter of 2013 by handsets and tablets of the DRAM market will reach 26.7 percent—almost double from 14.1 percent in the first quarter this year.

The decline of PCs in DRAM share appears irreversible. However, it’s important to note that PCs will remain the largest single market for DRAM at least through the end of 2013, and overall DRAM bit shipments for personal computers will continue to grow.

The expansion in DRAM market share for tablets partly is a result of the sheer growth in tablet shipments, which has come at tremendous expense to PCs. For instance, tablet shipments will climb 24 percent in the third quarter and then by 55 percent in the fourth quarter. Laptop shipments, meanwhile, are expected to increase by just 9 and 12 percent, respectively, during the same two periods.

Tablets have been growing in popularity since the iPad was introduced in 2010 at the cost of PCs, especially notebooks, with tablets being regarded as acceptable PC complements or substitutes. And despite economic uncertainties worldwide, the tablet market continues to enjoy bright prospects ahead—in part because of the ease of use and portability of the devices, and also because of the “wow” factor associated with them.

The growing share of tablets in the DRAM market can likewise be attributed to more DRAM bits being loaded onto the devices. The third-generation new iPad has double the DRAM content of its predecessor, with up to 1,024 megabytes compared to 512 megabytes in the iPad 2.

The additional DRAM in the new iPad brings it in line with direct competitors such as the Galaxy Tab 7.7 LTE from Samsung Electronics and the Jetstream from HTC, both of which also contain 1024 megabytes of DRAM. Among tablet devices, the Amazon Kindle Fire is the only tablet with less than 1 gigabyte, but the Kindle Fire is not competing directly with the more powerful tablet devices.

Like the solid quarterly results, the long-term trend for DRAM in tablets is equally encouraging.

Rapid growth continues despite some deceleration in market share expansion for tablets, reaching a 9 percent rate of increase by 2016.

DRAM loading in tablets is also solid for the years ahead, reaching 2 gigabytes by 2015 after DRAM loading growth of 79 percent this year, and then tapering to a still-elevated 30 to 40 percent expansion rate from 2013 to 2016.



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