The number of DRAM manufacturers is also declining, with Taiwanese memory makers such as Nanya Technology and Powerchip Technology failing to keep up with competitors in output and manufacturing technology. The market will further consolidate when the third-largest memory maker, Micron, acquires Japanese memory maker Elpida, Matas said. Right now, Samsung is the largest memory maker with around a 40 percent market share, followed by SK Hynix with a mid-20s percentage market share and then followed by Micron and Elpida, according to IC Insights.
IC Insights is projecting desktop demand to remain flat through 2017, with laptop demand increasing at a rate of about 5 percent per year.
One bright spot for DRAM is the growing demand for smartphones and tablets. Low-power DRAM has a 20 percent margin premium compared to PC DRAM, Matas said, adding that a lot of manufacturing capacity is being moved over to low-power memory.
PCs now use DDR3 DRAM, but new DDR4 memory will come out by the end of this year. DDR4 will not provide an immediate boost to the DRAM market this year, but its effects will be felt starting next year, Matas said. DDR4 DRAM is faster and more power-efficient than DDR3. Servers are expected to be the first to get DDR4 memory and initial adopters will pay a premium. Prices of new DRAM usually fall as the memory is used in more computers.