The most important semiconductor in the Data Center

The data center is not a new invention, it originates from the mainframe older than the PC itself. Where the PC is dominated by consumer and B2B buying decisions the data center is a corporate support function designed to aid the value creation process of the company. As with all other support functions, the corporation will always try and optimise the cost in order to deliver a higher profit. In other words, data storage and computational capacity should be minimised to the level sufficient to support the business. This business perspective does not change by moving the enterprise data to the cloud, this is merely an outsourcing decision.

What has changed is the way that the new cloud companies treat data. For Amazon and Google and the likes, data is not “cost” – it is the new oil. The new internet giants store everything they can irrespective if they can use the data immediately. They will then mine this dark data for insights they can use to optimise their own business or sell to other companies. For these companies, data storage is not a support function but part of the value creation process itself. You will not see Amazon run out of cloud storage.

The increasing dominance of the cloud companies has also changed the supply and demand equilibrium in the memory market. A limited supply made pricing increase and dampened demand and ample supply did the opposite. Not only do the cloud companies need more storage to support their dark data, they also treat memory supply as a long term strategic need that will not be stopped by increased memory pricing. This is the main driver behind the current memory boom and it does not show signs of slowing yet.

The most important part in the Datacenter is now a DRAM.

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