Hynix Semiconductor pulled off a double upset in the DRAM market with a remarkable increase in shipments causing it to rise to the second rank for both the fourth quarter and for all of 2006, up from third previously, according to iSuppli.

Hynix's DRAM bit shipments surged by a sequential 31% in the fourth quarter of 2006, blowing out the expectations of iSuppli and of the market in general. In comparison, worldwide DRAM bit shipments for all companies increased by just 14% during the same period.

The dramatic increase in shipments caused Hynix' revenue to surge to US$2.1 billion in the fourth quarter, up 42.9% from US$1.4 billion in the third quarter, iSuppli highlighted. iSuppli noted that this is the highest rate of revenue increase among all DRAM suppliers in the fourth quarter, with the next-fastest grower – Elpida Memory – seeing a rise of only 28%. The company's global DRAM market share in terms of revenues thus increased to 19.2% in the fourth quarter, up from 15.8% in the third quarter. This propelled Hynix past Qimonda to take the second rank in DRAM for the quarter.

Hynix's blow-out fourth quarter also pushed the company into the second DRAM rank for the entire year, iSuppli said. The company accounted for a 16.6% share of DRAM revenue for all of 2006, putting it behind only market leader Samsung Electronics in the global DRAM business."Hynix's success was due to its aggressive migration to 80nm process technology and its fast ramp up of its Wuxi fab in China," said Nam Hyung Kim, director and principal analyst for iSuppli.

Source: iSuppli, compiled by DigiTimes.com, February 2007

Samsung remained the top DRAM supplier in the fourth quarter with a 28% share of the market.

Qimonda, which was spun off from Infineon Technologies, had been the number-two DRAM supplier for the first three quarters of 2006. However, because Qimonda fell behind Hynix by a whopping US$545 million in the fourth quarter, it lost control of the second position for the entire year, iSuppli said. The company's revenues declined by 2% in the fourth quarter compared to the third because its shipments decreased by 3%, partly due to production problems at its foundry partner, Inotera Memories, the research firm noted.

Although it lost its second-place ranking to Hynix, Qimonda increased its DRAM revenue by an impressive 66% for all of 2006. Meanwhile, Micron Technology's DRAM sales declined by 3% in 2006 due to its ongoing strategy of diversifying its product line to other types of components. Because of this, Micron missed out on the dramatic growth in the DRAM market in 2006.

As expected, Elpida surpassed Micron for the first time ever in the fourth quarter to become the number-four DRAM supplier. Elpida attained an 11.1% market share in the fourth quarter, while Micron's portion of global DRAM revenue dropped to less than 10% to 9.5%. Overall, 2006 was a stellar year for Elpida, with its DRAM sales rising by nearly 100% compared to 2005.

The company's strong performance was also reflected in its stunning annual equity return of more than 70%, which was the highest among all DRAM suppliers in 2006. Elpida's recently-announced joint venture with Powerchip Semiconductor Corporation (PSC) is expected to increase its market share even more in 2007.

The global DRAM market grew by 36% to US$33.9 billion, which is higher than iSuppli's previous forecast from the fourth quarter of 34% growth and US$33.2 billion in revenue. The DRAM industry was one of the most profitable segments of the semiconductor industry in 2006, with operating margins as high as 45%. PSC, Samsung and Hynix in 2006 led operating profitability among suppliers and their continued investment in their facilities are expected to put more pressure on their competitors in 2007.