Top-15 DRAM module roundup: Kingston manages to achieve 30% YoY sales growth despite industry trough

While ASP of DDR2 512Mb and 1Gb plunged by a respective 86% and 70% and edged to makers’ variable costs in FY07, not only DRAM makers but DRAM module makers suffered. Any players, who do not manage their financials or inventory well, were all exposed to stiff risks. Yet, DRAM module makers still managed to maintain sales growth amidst the stiff pricing environment.

DRAM module sales totaled at US$11bn in FY07, with the top five vendors accounted for 46% of the total sales and the top 15 accounted for 72%. Only one of those being listed as the top 15 vendors was being expelled from the top-ten list. And there comes a new comer in the list from Japan - Buffalo.

Positions of the top three vendors maintain static, with Kingston still topping as the number-one vendor on an enlarged market share. ADATA and Smart Modular Tech. hold their second and third position firm, though their sales have declined by about 10% YoY respectively. Of the top-15 vendors, they still have their sales grew by a mild 3.6% YoY in FY07.

Sales from those players that are not listed in the top-15 list have declined by 42% YoY, signifying that their weaker price competitiveness may force them to quit the market if they fail to establish a foothold in niche applications sales.

Top-ten vendors snapshot

Kingston is the one DRAM module maker that is powerful enough to manage growth during industry downturn. Its sales grew by 28.6% YoY in FY07. Combined sales of the top-two to top-three vendors are still lower than Kingston’s. Its precise pricing strategy and well inventory management are the two fundamental criteria making its achievements outstanding. Thanks to its competitive pricing strategy in emerging countries, the encouraging market share gain has helped secured its dominant foothold further.

Among all major vendors, Transcend is the one that achieved strongest sales growth, with its annual sales grew by 36% YoY in FY07. Besides the sufficient capacity backup from its Suzhou operation, its customized sales and marketing strategies in respective regions is also a judging factor. Sales growth in FY07 is mainly stemmed from emerging regions including Eastern Europe, the Middle East and Russia. Southeast Asia and India are believed to be the two key sales drivers in FY08.

Apacer records its sales up 11% YoY in FY07. In addition to the consistent growth that driven by parent company, Acer, in notebook market, the extending synergy from brandname promotion also helps boosting sales. As of FY07, the company has its sales evenly spited up by DRAM and NAND Flash, in contrast to a 70% sales exposure to DRAM module business in FY06. Apacer currently records satisfactory sales from Eastern Europe and China. Sales target is expected to be placed on emerging markets in FY08.

Buffalo from Japan is a new comer to the top-15 list in FY07, and it is also the only one Japan based company in the list. The company marks its success by not just eyeing Japan market but global markets. It has established sales branches all over the world. Built on its superior quality, it grabs more market share in its long-established markets including Europe and the US, as well as Southeast Asia and India.

DRAM supply bit growth is expected to be 55% in FY08. As DRAM makers either cut capex or slow down new fab construction, a stabilizing price environment is foreseeable. This implies that DRAM module makers should see less pressure from a volatile pricing environment this year. Also, they are expected to lower risk by growing sales exposure to NAND Flash to pursue for a higher elasticity for better profit.

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