Composer update memory limit

Set it to use as much memory as it wants with:

COMPOSER_MEMORY_LIMIT=-1 composer update

When you run composer update, the OS will look into the configured paths and try to locate an executable file with that name.

When running php composer update, the composer string is treated as a parameter to PHP, which is not searched in any paths. You have to provide the full path in order to run it.

Running which composer will tell you where the OS finds the composer executable, and then you simply use the full path in the PHP command:

$>which composer/usr/local/bin/composer$>php -d memory_limit=512M /usr/local/bin/composer update...

Note that 512MB might be too few. My perception is that it will happily take 1GB or more, depending on the number of dependencies you use and the variety of versions that you theoretically allow, i.e. if you allow Symfony ~2.3, then you make Composer deal with a lot more possible versions compared to using ~2.7.

Also note that running Composer on the production machine is not the best idea. You would have to have access to Github, maybe provide access credentials, have VCS tools installed, and you will easily break your site if any of the remote hosting servers is offline during your update. It is a better idea to use Composer on a deployment system that does all the preparation, and then moves all the files onto the production server.

Update

It's the year 2020 now, and the way Composer manages its memory has changed quite a bit. The most important thing is that Composer will increase the memory limit by itself if it encounters a limit set too low. This however immediately triggers the problem of running out of memory on machines that have too few memory installed. You can make Composer use less memory by setting the environment variable like COMPOSER_MEMORY_LIMIT=512M, but this will create problems if Composer would need more memory to correctly operate.

My main point remains true: Do not run Composer on machines that have too few memory installed. You potentially need 1.5 GB of free memory to be able to update everything.

The best solution for me is

COMPOSER_MEMORY_LIMIT=-1 composer require <package-name>

mentioned by @realtebo