Over the past 20 years, overcapacity has created wildly cyclical pricing for both DRAM and NAND devices, which in turn has led to fewer manufacturers. For DRAM devices, just three global players now account for 95% of supply; for NAND devices there are just five companies producing 92% of global supply.
In consequence, supply discipline has improved – even as demand has surged thanks to developments in artificial intelligence and ‘cloud’ computing. Pricing has soared as a result – with spot prices for NAND chips up 50% and DRAM spot prices up 115% over the past year.
While we recognise that the industry is a cyclical one, we believe the current/supply dynamic is good news for companies involved in the sector, particularly those that have committed to shareholder rights.
Caroline Keen – Newton, a BNY Mellon company
 Dynamic Random Access Memory (DRAM) and NAND Flash memory chips are commonly used to store data in computers, smartphones and digital cameras.
 The Register: ‘Guess who’s getting fat off DRAM shortages? Yep, the DRAM makers’, 18 May 2017
 IHS Markit: ‘NAND Memory Market Tracker’, Q2 2017
 Dow Jones: ‘Samsung Topples Intel as World’s Biggest Chip Maker’, 30 July 2017. Data from DRAMeXchange, a publication that tracks memory chip sales and prices.