It seems that DRAM makers are still unaware of the impact NAND flash will have on DRAM revenues. Even though many are paying a lot of attention to the impact of the Tablet PC on Notebook PC shipments, few understand that even a healthy notebook market will start to place a decreasing focus on the system DRAM in the near future.
The reason why is simple, and it’s explained in great detail in a report: How PC NAND will Undermine DRAM. In a nutshell, once a basic minimum DRAM requirement has been met, NAND flash yields a greater performance return per dollar than does DRAM. This is illustrated in the graphic to the left.
Forget about the fact that NAND flash is nonvolatile, and that it offers fast boot times. To the consumer this is of very little importance. Instead focus on the fact that NAND is significantly faster than an HDD yet it costs one sixth as much per gigabyte as DRAM and that price difference will grow over time. Since DRAM’s sole purpose in the PC is to make the HDD look faster than it really is, NAND fulfills this requirement better at a lower cost. Savvy data center managers have known this for years, and have used SSDs to reduce their DRAM usage in the server.
The report spells out how NAND’s acceptance in the PC will result in declining DRAM gigabyte growth. As this happens, the DRAM market is likely to enter a very lengthy stage of ongoing overcapacity, since DRAM makers are likely to continue to expand and upgrade their manufacturing capacity as they have in the past. Constant overcapacity will result in constant fiscal losses. DRAM manufacturers are facing very big trouble.
Intel has just orchestrated the successful roll-out of a wide array of Ultrabook PCs. In order to be classified as an Ultrabook a PC must include an SSD or other NAND flash, either as a cache to accelerate the PC’s performance, or as the only storage in the system. This will be the triggering event that drives NAND into mainstream PCs.
Intel doesn’t much care how the NAND is added to the PC: it could be an SSD as main storage, or it could be a very small SSD used as a cache. Both Intel and Micron have introduced low-capacity SSDs specifically designed for this application. It could even be a small PCIe flash card, or a hybrid drive like Seagate’s Momentus XT.
What is important is that the momentum has started for NAND flash to become included in mainstream PCs, and this will lead to DRAM stagnation. DRAM makers who have not prepared for this will find themselves in an untenable position, and are likely to become the next to fall during the DRAM market’s inevitable further consolidation.