Another Sign that PCs are Losing Ground

Shipments of dynamic random-access memory (DRAM) chips to the PC industry have fallen below 50% for the first time since the 1980s according to new data from IHS iSuppli released today. In the second quarter of 2012, DRAM shipments to PC makers fell to 49% of all shipments, down from 50.2% of shipments in the first quarter of the year.

A memory analyst at IHS drew the by-now standard conclusion:

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. What the post-PC era does mean is that personal computers are not at the center 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. …

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. 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 Inc.'s smartphone- and tablet-driven ascendency to chip purchasing leadership above traditional PC-oriented frontrunners like Hewlett-Packard.

The world's largest supplier of DRAM is Samsung, with a 71% market share at the end of the first quarter of this year. Korea's SK Hynix Inc. is second with a 15% share, and Micron Technology (NASDAQ: MU) is third with about 13% share following its acquisition of Japan's bankrupt Elpida Memory Inc.

IHS expects cellphone demand for DRAM to rise from 13.2% of shipments in the second quarter of this year to 19.8% by the end of 2013. Shipments for tablets are also expected to rise sharply, from 2.7% in the second quarter to 6.9% by the end of next year. That's nearly 27% of DRAM demand.

Demand for DRAM from PC makers will slide to 42.8% of shipments by the end of next year, with the remaining demand coming from game console makers, network equipment makers, hard drive makers, and printer manufacturers among others.

It is, indeed, a brave new world.

Paul Ausick

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