Managing the DDR4 DRAM Transition

Even with the introduction of DDR4 memory, prices for DDR3 remain high, complicating purchasing decisions for system builders.

By Hank Hogan

System builders may get a holiday gift this year, at least as far as DRAM is concerned. Prices are up. What’s more, despite the introduction of a new memory technology, the premium may last for years.

“The market is very balanced and we expect it to get tighter later this year as builds kick-off for the holiday season,” says Mike Howard, director of DRAM and Memory Research at global market information and analytics firm IHS Inc. As for steps that can be taken to ease the price hit and any shortage, long-term contracts are the best way to limit upside pricing risk, according to Howard. Such contracts also assure supply.

This shortage is taking place against an unusual backdrop. The dominant DRAM technology in 2014 is DDR3, which has a double data rate interface that can enable data transfers topping 2,100 megabits per second (Mb/s). The follow-on technology, DDR4, is just now being rolled out. Support from processor makers Intel and AMD for servers, desktops, and laptops is coming in 2015, Howard indicates.

The new memory technology is faster than the old, allowing transfer rates of up to 3,200 Mb/s or about a 50 percent increase. DDR4 modules can also be manufactured at twice the density of DDR3. What’s more, DDR4 operates at a 20 percent lower voltage, making it more battery-friendly.

Still, the new memory technology is launching with roughly a 30 percent price premium over DDR3. The price crossover point from old to new technology is not expected to take place until 2016. So for the next few years, memory prices will likely remain high.

Gordon Patrick, director of business development for Boise, Idaho-based memory maker Micron Technology Inc., predicts the sweet spot for DDR4 memory will be an 8-gigabit version, which has a higher density than the current technology. The result will be appealing for applications that need a lot of memory, such as cloud servers.

That highlights something different about the DDR4 transition. In past memory technology switchovers, clients created the demand. Consequently, the entire market quickly transitioned and prices rapidly fell. But that’s not the case with DDR4. Adoption of the technology is being spearheaded by the server and enterprise side of the market. “Common sense would say this transition could take longer than it would if it was being flushed through the client space first, where the volume would just drive it,” Patrick says.

Lessons for System Builders

Jim Handy, director and principal analyst at research and analyst firm Objective Analysis, says that the past offers lessons for today’s system builders. Typically, he says, the introduction of a new technology heralds rapidly falling prices for that technology, while prices stabilize for the old technology. “DDR3 prices in five years should be very similar to what they are today, but DDR4 prices will be substantially lower, making DDR3 very unappealing in comparison,” Handy says in applying this history lesson to the current situation.

His advice for system builders? Make a wholesale conversion to DDR4 as soon as the new memory technology becomes available. His other suggestion for dealing with memory prices is to look elsewhere in the system to get the best price-performance ratio. For instance, $100 spent on a solid-state drive may produce a bigger performance boost than the same amount spent on DRAM.

John Kistler, owner of system builder J&B Technologies Ltd., of Maryland Heights, Mo., reports no clamor from his clients for DDR4. He confirms that DDR3 DRAM prices have risen from their low point but finds DDR4 running at a premium. So, he thinks there are other, better options at the moment than going with a new, and at the moment expensive, memory technology.

In particular, Kistler advocates spending money on other performance-boosting technologies. One would be opting out of spinning media, hard-drive technology and into solid-state drives. His takeaway: “The bottleneck is still the I/O for hard drives. I would not go DDR4 before I would go SSD.”