DRAM market contracts in 2001
Sales up, prices down
The DRAM market has always been boom or bust, but it looks set to enter the bust part of the cycle earlier than usual, according to IDC.
The market research firm predicts worldwide DRAM sales will fall 18 per cent in 2001 to $23.8 billion, while unit prices will slump 46 per cent.
Soo Kyoum Kim, IDC semiconductor programme manager, attributes the DRAM price slump to a "combination of sluggish demand in the PC industry and a harsh inventory correction in the overall supply chain.
Inventory carryover will continue to plague demand and supply conditions until the middle of the third quarter, making it difficult to maintain current pricing levels. Seasonal price recovery is expected by the end of the third quarter, but will not be strong enough to turn the negative momentum of the market."
Prices on well-established DRAM formats have, in many cases, fallen below production cost, so DRAM makers will have to turn to newer memory technologies to hedge against price erosion, Kim says.
We're already seeing this on the Rambus front, with Toshiba and Samsung among others announcing a big expansion in RDRAM production. But what happens when increased RDRAM supply turns into RDRAM glut?
IDC reckons that the average DRAM "content" per PC will hit 174MB, 36 per cent up on 2000, and helped by a bit of price elasticity.
This will "push overall bit demand growth in 2001 to 56 per cent while supply will grow by 52 per cent. Despite the small gap, lingering inventories, limited memory budgets of PC OEMs, and the lack of a new OS to drive more hungry applications on PCs will still remain as the key inhibitors to demand." ®