Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
?
EE Times-Asia > Memory/Storage
?
?
Memory/Storage??

iSuppli: No memory rebound coming soon

Posted: 28 Apr 2009 ?? ?Print Version ?Bookmark and Share

Keywords:memory recovery? NAND flash? DRAM?

While overall memory chip prices are expected to stabilize during the remaining quarters of 2009, iSuppli Corp. said that true recovery in demand and profitability is not imminent.

After a 14.3 percent sequential decline in global revenue in Q1, the market for DRAM and NAND flash chips will grow throughout the rest of the year, iSuppli predicted. Combined DRAM and NAND revenue will rise by 3.6 percent in Q2, and surge by 21.9 percent and 17.5 percent in the third and fourth quarters, respectively, according to the firm.

"While this growth may spur some optimism among memory suppliers, the oversupply situation will continue to be acute," said Nam Hyung Kim, director and chief analyst for memory ICs and storage at iSuppli, in a statement.

Many memory chip suppliers are attempting to paint a more optimistic picture of the memory business by prematurely talking up a potential market recovery, iSuppli said.

In DRAM, the imbalance between supply and demand is far too great for the market to recover profitability in short order, Kim said. He added that shipments of equivalent 1Gbit density DRAM will exceed demand by an average of 14 percent in the first three quarters of 2009, preventing the strong price recovery required to enable most memory suppliers to achieve profitability.

"Even if all of the Taiwanese DRAM suppliers idled all their fabs, which equates to 25 percent of global DRAM megabit production, the market would remain in a state of oversupply," Kim said.

DRAM suppliers have been cutting capacity, but must still wait for fundamental demand recovery, according to iSuppli. The firm believes that another round of production cuts will take place in Q2, which will positively impact suppliers' balance sheets late this year or early in 2010 at the earliest.

DRAM prices now amount to only one-third-level of Taiwanese suppliers' cash costs, iSuppli said. Unless prices increase by more than 200 percent, cash losses will persist for these Taiwanese suppliers, the firm said. The average megabit pricing for DRAM is projected to rise in every quarter of 2009, but not remotely enough to allow suppliers to generate profits, iSuppli said.

Global quarterly DRAM and NAND revenue forecast (Click on image to enlarge.)

NAND recovery signals?
The NAND picture is more confusing, iSuppli said. Pricing for NAND since January has been better than the firm expected, but iSuppli said it does not believe signals a real market recovery.

Thanks to the current NAND price rally, the leading supplier, Samsung Electronics Co. Ltd, is close to break-even costs on NAND prices, iSuppli said. But the other suppliers continue to lose money.

"While the NAND market in the past has been able to achieve strong growth and solid pricing solely based on orders from Apple Computer Inc. for its popular iPod and iPhone products, this situation is not likely to recur in the future," Kim said. "Even if Apple's order surge, and it books most of Samsung's capacity, it would require a commensurate increase in demand to other suppliers to generate a fundamental recovery in demand."

It doesn't make sense for major NAND suppliers Toshiba Corp. and Hynix Semiconductor Inc. to further decrease their production if there is a real fundamental market recovery, iSuppli said. This means supply will continue to exceed demand and pricing will not rise enough to allow the NAND market as a whole to achieve profitability, the firm said.

The NAND market is in a better situation than DRAM, but remains challenging because fundamental demand conditions in the consumer electronics market have not improved due to the global recession, according to the firm.

"Production cuts undoubtedly will have a positive impact on the market in the future. However, it's too early for to celebrate," Kim said. He cautioned suppliers to be rational and watch the market conditions to avoid jumping to conclusions too quickly.

Kim's latest report on the DRAM market is offered for sale through iSuppli's Website.

- Dylan McGrath
EE Times





Article Comments - iSuppli: No memory rebound coming so...
Comments:??
*? You can enter [0] more charecters.
*Verify code:
?
?
Webinars

Seminars

Visit Asia Webinars to learn about the latest in technology and get practical design tips.

?
?
Back to Top