I have often heard this story myself, for DRAM as well as for flash (both NAND and NOR) but I had never put in the time to test the assertion.
This statement is certainly attention grabbing, and because of that presenters everywhere will find some way to include this “fact” into their slideshows. “But is it true?” he asked me.
Objective Analysis doesn’t track each company’s DRAM profits individually. DRAM maker profits often must be estimated since a large share of the product is manufactured by conglomerates who don’t report profits down to that level.
Instead we keep a DRAM profit model that implies costs based on market behavior. The model was originally derived through a very large historical database of highly-detailed information: manufacturer costs for each device density for individual manufacturers as well as each manufacturer’s surveyed quarterly unit shipments, going back to the dawn of the DRAM market. This great collection of numbers produced a surprisingly uniform result that we found could be modeled very easily using a more general market behavior method. The model’s output compares well against combined company profit estimates that certain stock analysts have been kind enough to share with us from time to time.
The chart in this post shows aggregate profits for the industry from 1991 to 2011. Clearly the average over time is greater than zero. In fact, the model shows that the aggregate profit over the past 21 years has been nearly $200 billion. This is out of $477 billion in revenues! It’s a pretty good market for those who can stay in it.
Staying in the DRAM market is indeed a difficult trick, a challenge that is spelled out in detail in the Objective Analysis Brief: Why the DRAM Market Must Consolidate, which can be purchased for immediate download from the Objective Analysis website.