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DRAM woes coming to an end, Micron reaps rewards

Posted: 21 Jun 2013 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? NAND flash? DDR3?

According to the latest report from DRAMeXchange, a research arm of Trendforce, due to the rising spot prices of DRAM (which has grown twofold since last November), the spot market price of DDR3 2Gb may reach $2 in the coming period. The downtrend that befell the DRAM industry may soon become history as Micron's June 19th financial report is seen as a testament of the positive forecast.

Observing from the market perspective, with Nanya officially transitioning into a speciality DRAM company and handing over its manufacturing responsibilities of Inotera to Micron, the U.S. based chip maker can be said to be in a relatively strong position to increase its entire PC and server DRAM production. In the past, PC DRAM had been known to be largely unprofitable due to the intense competitions that took place within the market. The losses incurred in the industry had been so severe that, at one point, various DRAM manufacturers felt the urge to switch to the more profitable product lines. The DRAM industry's financial woes would not change for the better until early 2013, when the production of PC DRAM shrunk and led to a continuously declining supply bit growth.

At present, both Samsung and SK Hynix are actively lowering their PC DRAM output in favour of manufacturing mobile and server DRAM. The decision is in many ways largely beneficial to Micron, whose PC DRAM production ratio is almost 50 per cent. With regard to H2, given that Micron's and Elpida's merger process is set to complete during Q3 (a process that would in effect help to increase the wafer production volumes from 190K to 370K), it is reasonable to expect the Micron group's presence in the mobile DRAM market to increase. As the DRAM market moves further towards an oligopoly, the company is expected to be able to pose legitimate challenges to both of the aforementioned Korean DRAM manufacturers.

Looking at the NAND flash industry, given that the supplies in the NAND flash market are being regulated more tightly this year, and considering how more and more manufacturers are transitioning to system products as a means to offset the weak sales effects in retail market, the contract prices in the NAND flash market have, for the most part, remained flat throughout Q2 (from April to June). The severe oversupply situation in 2H12, it should be noted, has also experienced a notable improvement this year.

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