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Gartner: Samsung in danger of losing DRAM top ranking

Posted: 02 May 2007 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM revenue forecasts? NAND flash? DRAM capacity?

Samsung's lead in DRAMs has fallen to a seven-year low, according to Gartner Dataquest, and the South Korean giant has responded by expanding production of the memories by nearly 100 percent this year. This, Gartner Research VP for semiconductors Andrew Norwood warns, is threatening the industry with a year-long oversupply.

Preliminary 1Q 2007 DRAM revenue forecasts by Gartner indicate that Samsung's share of the market dropped to 25.5 percent, just 2.7 percent above its nearest rival Hynix. This is Samsung's smallest lead in the DRAM market since 2000 when it was Micron who was challenging the leader. Over the last five years, Samsung has enjoyed on average a 13 percent lead over their nearest rivals.

Norwood suggests Samsung is scared that Hynix will take the top position, which is why it is pushing ahead with a huge DRAM bit growth target this year, despite the fact that the market research group expects that NAND flash is going to be more profitable in the second half. Yet Samsung appears not to have any plans to convert DRAM capacity to NAND.

"So, it looks like the DRAM industry is returning to a classic market share battle with little regard for profitabilityvendors are going to suffer. Business as normal in the DRAM market," says Norwood.

Samsung saw DRAM revenue decline by 22.3 percent in 1Q 2007, to $2.45 billion, compared with the last quarter of 2006 ($3.16 billion). The overall decline in DRAM sales between the two quarters was a massive 11.6 percent, according to Gartner.

The total market was $9.59 billion, compared to $10.85 billion in Q4 2006.

The big surprise, according to Gartner, was Hynix who was able to increase revenues by 6 percent to $2.18 billion, due to massive bit growth of 45 percent quarter-over-quarter. This was due to the continued ramp of its new 300mm fabs combined with a shift of some capacity from NAND to DRAM along with increasing percentage of 80nm production.

In fact, Hynix overtook Samsung in terms of bit shipments in 1Q 2007, and unless Samsung achieves substantial bit growth in coming quarters there is a possibility that Hynix would strengthen its megabyte lead and claim the revenue crown as well, suggests Norwood.

However, Hynix saw strong ASP decline of 27 percent in the quarter. Gartner says similar declines affected other vendors as well due to the oversupply conditions.

Market shares
Hynix's market share now stands at 22.9 percent, still behind Samsung's 25.5 percent. Qimonda held on to third spot with a 13.3 percent share, down 16.7 percent from the previous quarter to $1.28 billion. This decline was due to lower than average bit growth.

Another company to make big gains this quarter according to Gartner's rankings was Elpida, who increased its share of the market to 12.2 percent and revenues of $1.17 billion, and is challenging strongly Qimonda for third place. Like Hynix, Elpida's market share gain came as a result of strong bit growth of 40 percent in the quarter.

Micron, Nanya, Powerchip, ProMOS, Toshiba and Etron fill the other spots in top 10, all having single-digit market shares. Nanya and ProMos both suffered over 20 percent declines in sales during the first quarter, according to Gartner, while Micron, fifth at 8.6 percent market share, declined by just 5.4 percent to $885 million.

Gartner says all the suppliers save Micron are rushing to add capacity, with the Taiwanese suppliers in particular "feverishly adding capacity to support their technology partners in the front line of the conflict."

- John Walko
EE Times-Europe

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