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DRAMs, NAND flash shortages loom

Posted: 19 Apr 2010 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? NAND flash? supply shortage?

DRAM and NAND flash memory supplies are tight right now and OEMs could find themselves on the outside looking in for parts.

Not long ago, chipmakers could not buy an order amid the terrible downturn. Now, amid the upturn, there are widespread reports of component shortages in the supply chain, including analog, NAND and DRAM.

"Based on recent checks throughout the supply chain we have found that DRAM remains tight throughout the industry. PC and server demand are driving prices higher," said Daniel Amir, an analyst at Lazard Capital Markets, in a report. "We expect Q2 to continue to see positive DRAM demand. We believe that DDR3 pricing will be up 5-10 percent in April."

NAND is also hot. "Based on our checks, SanDisk is no longer providing NAND chips to second-tier card makers, and is instead only supplying packaged cards through its white label business," said Amir.

"At the same time Samsung and Toshiba will only be supplying chips to select customers due to continued supply constraints," he said. "We believe the card side of the market will remain under pressure as Apple comes back to the market and smart phones continue to gain traction."

Pricing is also an issue. "We were expecting flat pricing in April but our latest checks suggest that pricing may be up for Q3," he said. "Apple has increased its iPad orders and will be refreshing the iPhone as usual in the summer and therefore should start ordering flash for the refresh in May. The retail card market traditionally sees a seasonal uptick in May and June also. We are currently modeling contract pricing to be flat to up 5 percent in Q2."

Others have a different viewpoint. "Recent channel checks indicate that buying activity has accelerated by some key customers in an effort to replenish depleted inventories," said Joseph Unsworth, an analyst with Gartner Inc., in a recent report. "This trend is expected to continue throughout the second quarter, as prices are expected to remain relatively soft in advance of the third-quarter buying season."

And will Apple Inc.'s iPad impact prices? "NAND customers must be careful of the uncertainty in the market, especially with the recent introduction of Apple's long-awaited iPad," he said. "While the effect of Apple's iPad introduction has not been felt immediately throughout the NAND industry in terms of consumption, it will have an impact for the following two reasons: Apple needs to restock its own inventory, which is believed to be low, and competitors are launching competing products, thus increasing NAND demand."

Unsworth's suggestion: "Gartner still maintains that there will be buying opportunities, but customers will have to be diligent and tactical in their buying behavior to secure good prices."

Meanwhile, Gartner recently released the 2009 rankings in the NAND market:

- Mark LaPedus
EE Times

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