Analysts blackball DRAM makers
Spot price could go anywhere
The DRAM price debate was set ablaze again following the decision by Credit Lyonnais Securities to delete DRAM stocks from its list of suggested companies to buy. As soon as this became public, several other leading stockbrokers followed suit, including UBS Warburg and Jardine Fleming Securities.
One industry source told us that no one really knows what is happening to pricing right now. "It is very difficult to say what will happen. Some people are saying the price will go up, others are forecasting a drop, so we are all taking each day as it comes," he said.
It seems he is right on the money. One analyst said that the Asian DRAM spot price would not pick up again in the short term without a corresponding increase in PC demand. On the other hand, analysts at Merrill Lynch Pierce and Fenner & Smith are still sitting on the fence, advising clients to wait and see how it shakes out.
Hyundai Electronics has said it expects DRAM prices ot rise in October following an increase in PC demand.
The spot price of 64Mb DRAM has fallen steadily over the last two months, losing about 22 per cent in total. In the US the spot price is now sitting at $6.6, down from over $8 earlier this summer, while in Asia it has fallen below the $6 line.
According to analysts at UBS Warburg, there is still room for DRAM shares to fall further, as the spot price continues its slide. This will have a knock-on effect on the growth of the companies, which was at 56 per cent in 2000. Figures mentioned for 2001 are as low as 19 per cent. ®
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