[Chip Talk] Lessons from 30 Years of DDR DRAM Wars: "Develop Advanced Products During Recessions to Capture the Market"

DDR 1~4 Samsung, DDR 5 SK First Development
Largest Share in DRAM Market... Cannot Give Up Despite Profitability
High Demand from Intel and Nvidia... Intense Mid- to Long-Term Competition

The adoption rate of DDR (Double Data Rate) DRAM (shipment share) is the highest in the overall DRAM market. Its shipment volume exceeds that of mobile DRAM. Historically, it is no exaggeration to say that this market has been led by Samsung Electronics and SK Hynix. When Samsung Electronics led product launches and standard registrations, SK Hynix followed the trend. In the case of the latest generation, DDR5, SK Hynix launched new products ahead of Samsung Electronics.

The increase in the share of DDR DRAM in the DRAM market began in the late 1990s. It became a JEDEC (Joint Electron Device Engineering Council) standard technology in 1997, a process led by Samsung Electronics. Samsung Electronics succeeded in the first development of four consecutive generations of DDR DRAM: DDR (1997), DDR2 (2001), DDR3 (2005), and DDR4 (2011). They also accomplished JEDEC standardization work. In October 2020, SK Hynix became the first to develop DDR5 DRAM, surpassing Samsung Electronics for the first time.

A characteristic of the DDR DRAM market is that it takes a long time to reach the number one adoption rate after the launch of the latest product. It usually takes 3 to 5 years. In the case of DDR4 DRAM, it surpassed DDR3 adoption rates in 2015, four years after its release in 2011. DDR5 is growing at a similar pace. According to data surveyed by market research firm Omdia in the first quarter, last year’s DDR5 DRAM shipment share was 3% of the total DRAM market, much lower than DDR4 DRAM at 53% and mobile DRAM at 37%. It is expected that next year, DDR5’s shipment share will reach 27%, surpassing DDR4 (19%). Furthermore, it is anticipated that only by 2026 will DDR5 shipments reach 48%, barely overtaking mobile DRAM (42%). This means that a product launched in October 2020 will take until 2026 to grow into the top product.

Samsung Electronics Chairman Lee Jae-yong inspecting the package line at Samsung Electronics Cheonan Campus and reviewing business strategies on February 17.
[Photo by Yonhap News]

If the recovery of DRAM market demand, global economic recovery, and growth of the DDR5 adoption CPU market are delayed, the spread of DDR5 products will inevitably slow down. Intel’s 4th generation Xeon Scalable processors with DDR5, released last January, also came out about half a year later than the initially announced schedule. Taiwanese market research firm TrendForce stated on the 10th that this year’s DDR5 adoption rate is only 13%. Omdia’s shipment share forecast is similar at 12%. The overall DRAM market outlook is not favorable. According to Omdia’s research, the compound annual growth rate (CAGR) of DRAM sales from 2022 to 2027 is only 4.4%. Sales in 2022 are expected to decline by 15.7% year-on-year to $79.334 billion (approximately 100 trillion KRW), and this year, sales are forecasted to shrink by 44.1% to $44.322 billion (approximately 56 trillion KRW), indicating negative growth.

Although it takes a long time to become the number one in adoption rate and the market situation is unfavorable, both companies do not give up on the DDR DRAM market. They believe that until customer requests come in, they must at least produce superior products faster than competing memory semiconductor companies to increase their bargaining power with customers. Semiconductor companies have unanimously stated that they need to develop next-generation DDR DRAM even before Intel and AMD CPU products and Nvidia GPU products are released. An industry insider said, "Regardless of the DRAM market sales scale and growth trend, the best sales strategy a component company can do is to develop leading-edge products faster than customer demands and enhance profitability through well-planned marketing and negotiation strategies."

The mid- to long-term outlook for the DDR DRAM market is bright because CPU and GPU product demand is expected to increase. Especially for running large language models (LLMs) used in generative artificial intelligence (AI) like ChatGPT, massive data is required, so there is broad consensus that excellent GPUs and superior GDDR products are necessary. In fact, Samsung Electronics’ leading-edge GDDR7 DRAM product has not yet formed an initial market. It is only speculated that top GPU customers worldwide, such as Nvidia and AMD, will release products around the first half of next year.

Memory semiconductor companies like SK Hynix are also reportedly planning to release GDDR7-related products at least by the first half of next year. Because of its wide range of applications and expected explosive response, they believe it must be developed quickly. Bae Yong-cheol, Vice President of the Memory Product Planning Team at Samsung Electronics’ DS (Device Solutions) Division, said, "GDDR7 DRAM will provide a more differentiated user experience in applications requiring excellent graphics performance such as workstations, PCs, laptops, and game consoles. We will commercialize it in a timely manner to meet premium graphics market demand and continue to lead the next-generation graphics DRAM market."

According to multiple industry insiders, Samsung Electronics and SK Hynix’s DDR DRAM technology is somewhat ahead of the U.S. company Micron. Both Samsung Electronics and SK Hynix hold confidential internal estimates of their DDR5 market shares. Samsung Electronics’ DDR5 share is slightly ahead of SK Hynix’s. An industry insider said, "No matter how good the performance is, memory semiconductors are ultimately general-purpose semiconductors. Not only DDR5 DRAM but also AI and automotive semiconductors will continue to see fierce individual battles over a long period."