The market for DRAM, the system memory chips in PCs and servers, is set to grow by more than 40% this year, marking the first year-to-year increase in three years, a research firm said.

Revenue from DRAM, or dynamic random access memory, will rise to $31.9 billion, iSuppli said. The increase follows year-over-year drops of 3.7% in 2009, 25.1% in 2008 and 7.5% in 2007.

"This year will build on the momentum built up in the fourth quarter of 2009, when overall industry revenue increased by 40% sequentially," iSuppli analyst Mike Howard said in a statement released Thursday.

Driving revenue in the quarter was an increase in shipments of DRAM combined with higher average selling prices. ASPs climbed 16% sequentially and bit shipments rose 21%. The result was revenue of $8.5 billion, the first time the industry has topped $8 billion in a quarter since the first quarter of 2007, iSuppli said.

However, annual growth is not expected to continue from 2011 to 2013. iSuppli forecasts revenue declines during the period, but expects levels to stay well above 2009 revenue.

"iSuppli foresees a period where the DRAM industry will see solid revenue and steady profits as DRAM suppliers have done a good job managing manufacturing capacity," Howard said.

The improving DRAM market coincides with a healthier PC market. PC shipments in the fourth quarter of 2009 rose 22.1% year-over-year to 90 million units, according to Gartner. Rival IDC reported a 15.2% increase to 85.8 million units. Both firms forecast growth to continue this year.

In looking at DRAM vendors, iSuppli said Elpida was a standout in the last quarter of 2009 with revenue of $1.7 billion, up 64% from the previous quarter. The company turned a profit of $230 million, the first quarterly profit for Elpida since 2007.

Other vendors also saw sequential revenue increases. Micron's DRAM revenue swelled 50%, while Hynix and Samsung saw growth of 42% and 25%, respectively.

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