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iSuppli sees DRAM market relapse

Posted: 30 Aug 2007 ?? ?Print Version ?Bookmark and Share

Keywords:iSuppli report? DRAM? market relapse?

Happy days are over for DRAM vendorsagain. After a brief respite, the DRAM market is poised to take a turn for the worse in September, according to iSuppli Corp.

The DRAM market fell into a deep slump starting October 2006, but the sector finally rebounded in Q2 of this year. Overall, the DRAM market is projected to grow a mere 1.97 percent in 2007, according to the research firm.

Waning momentum
iSuppli also believes that DRAM prices will begin to decline in September amid an ongoing memory glut. Momentum is waning in the spot market, as rising prices and falling supply of LCD panels cut into the available budget for memory in some PCs, according to the research firm.

Suppliers' efforts to cut production starting Q3 will play an important long-term role in strengthening the DRAM market.

Still, iSuppli now foresees the possibility of double-digit sequential price declines in Q4, erasing any increases that aided suppliers in Q3. DRAM suppliers' profitability will dwindle in Q4, compared to the third, iSuppli predicts.

"OEMs and the channel are still working off the inventory oversupply left over from January, which will make it a difficult fourth quarter for memory manufacturers," said Nam Hyung Kim, director and chief analyst for memory ICs/storage systems at iSuppli.

"Furthermore, the shortage of LCD panels is preventing white-box PC makers from purchasing more DRAM. Increasing panel prices also are slowing DRAM content growth in PCs in the third quarter," he said.

There is one factor that could alter the outlook for Q4: the recent power outage that impacted operations at Samsung Electronics Co. Ltd's NAND flash memory manufacturing operations.

This outage forced Samsung to shift some DRAM capacity to NAND. iSuppli believes that Samsung will not achieve its plan to increase its DRAM bit production in the mid-20 percent range in Q3 due to its shift to NAND manufacturing.

"However, Samsung's impact on the DRAM market is less than it might otherwise be due to the DRAM inventory issues," Kim said.

Global annual bit growth in 2008 will amount to less than 60 percent, compared to the explosive 97 percent bit growth expected in 2007. This will help rebalance supply and demand in the market, according to the firm.

Differeng views
iSuppli's view is different, as compared to that from IC Insights Inc. A feeling of cautious optimism has finally spread throughout the DRAM industry following a downturn in 1H 2007, according to a recent report from IC Insights.

It appears that DRAMs turned the corner in July and will begin an upward climb, resulting in increases in quarterly growth through the balance of 2007, according to IC Insights.

For 2007, DRAM units are forecast to increase 49 percent, according to the research firm. DRAM bit volume is forecast to surge 81 percent in 2007, the highest percentage increase since the 88 percent increase recorded in 1998, according to the firm.

- Mark LaPedus
EE Times




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