EL SEGUNDO, CA – DRAM revenue rose to $7.1 billion in the first quarter of 2013, up nearly 6% compared to the fourth quarter of 2012, and up nearly 11% compared to the third quarter of last year, says IHS.

Revenue was the highest in nearly two years, exceeded only by the $8.1 billion set during the second quarter of 2011.

The market for DRAM continued its upward swing, as industry revenue grew sequentially for the second straight time during the first quarter, empowered by a rise in average DRAM prices, according to IHS.

The strength of the DRAM market was largely due to a rally in the commodity segment after shipments failed to keep up with demand, causing an undersupply of the memory type, the research firm says. Demand from the server and mobile segments offset the ongoing decline in PC demand, resulting in a shortfall of available DRAM. The inadequate supply of DRAM, in turn, pushed the price of the 4-gigabyte DDR3 module from $16 in December to $23 in March.

The jump in commodity prices helped the market continue the steady recovery that started in the fourth quarter, and the latest expansion indicated the industry had passed its lowest point and was returning to growth, says the firm.

The rally in pricing did not benefit all companies equally, however, favoring only those with high exposure to DDR3. Micron Technology, for instance, enjoyed a 40% rise in revenue, as revenue surged to $998 million from $714 million. Micron had the largest relative DDR3 output among all DRAM suppliers, and while its ranking in the DRAM market remained unchanged at No. 4, the revenue increase expanded Micron’s total DRAM market share to 14%, up three percentage points.

Micron also benefited from a full quarter of expanded access to DRAM production at Inotera Memories, a Taiwanese producer bought out by the US producer last year. As a result, Micron’s shipments grew more than 30%.

Meanwhile, top supplier Samsung Electronics’ share of the DRAM market tumbled to 36%, down 5 percentage points. Among the major suppliers, Samsung has the lowest mix of DDR3 product in its portfolio, given the company’s emphasis on mobile DRAM. Missing out on the DDR3 rally during the period, Samsung’s revenue fell to $2.6 billion, down from $2.9 billion.

For their part, second-ranked SK Hynix and third-place Elpida Memory enjoyed modest gains in revenue, following a respectable amount of DDR3 in their product offerings. SK Hynix closed the first quarter with revenue of $1.8 billion, up sequentially from $1.7 billion; Elpida saw revenue climb to $1.1 billion from $903 million.

At a distant fifth and rounding out the Top 5 was Nanya Technology with revenue of $291 million, up 4%.

Moving forward, the increase in DDR3 pricing is not expected to continue without the same occurring for mobile DRAM prices. Manufacturers are likely to shift capacity allocation away from the low-margin DRAM commodity space at some point in the future after the current undersupply situation is resolved, says IHS. The manufacturers will then focus on mobile DRAM, which historically has had a more attractive contribution margin, eventually causing a rise in mobile DRAM pricing. Even so, the current rally is encouraging, as it is unusual.

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