IC Insights reported that a DRAM ASP decline of 16% coupled with a forecast 3% decline in DRAM unit shipments is expected to result in the DRAM market declining 19% in 2016, lowest among the 33 IC product categories IC Insights tracks in detail. This steep decline will be a drag on growth for the total amemory market (-11%) and for the total IC market (-2%) in 2016.

IC Insights said, big swings in average selling price are not new to the DRAM market. Annual DRAM average selling price increases of 48% and 26% in 2013 and 2014 propelled the DRAM market to more than 30% growth each year. In fact, the DRAM market was the strongest growing IC product segment in each of those years. Then, marketshare grabs and excess inventory started the cycle of steep price cuts in the second half of 2015 and that continued through the first half of 2016.

On a positive note, DRAM ASPs strengthened in late 2Q16 and are forecast to continue growing through the balance of 2016 and into 2017. The boost to DRAM ASP is expected to come from demand for enterprise (server) systems, which have been selling well due to the need to process “big data” (e.g., the Cloud and the Internet of Things).

Also, low-voltage DRAM continues to enjoy solid demand for use in mobile platforms, particularly smartphones. Demand from new smartphone models is expected to help contribute to increasing DRAM ASPs through the end of this year and into 2017.

The upward DRAM ASP trend may be short lived, however, as two China-based companies, Sino King Technology in Hefei, China, and Fujian Jin Hua IC Company, plan to enter the DRAM marketplace beginning in late 2017 or early 2018. It remains to be seen what devices and what technology the two new entrants will offer but their presence in the market could signal that another round of price declines is around the corner.