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DRAM market to shrink 19% next year – Gartner

After falling 67% this year

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Gartner's outlook for the world's DRAM producers could be read as good news - just. After a disastrous year which, the market research organisation reckons, will see sales shrink 67 per cent, business isn't going to contract anywhere near as much during 2002. Given the DRAM market is now worth less than a fifth of what it was in 1995 - around $8.5 billion - Infineon, Micron, Hynix et al need what crumbs of comfort we can give them, poor dears. So we guess we shouldn't point out that Gartner believes that next year the market will shrink 19 per cent. The upshot, according to Gartner: companies will combine their DRAM operations in an attempt to make the savings necessary to get the cost of production down to below the levels at which memory chips are currently being sold. Not exactly a prescient statement, that - Toshiba and Infineon are already within spitting distance of an agreement that will see the pair merge their DRAM operations - but Gartner clearly believes such a deal is just the tip of the proverbial iceberg. "If [pricing] falls further it will go below variable costs and we'll see companies going bankrupt. Some sense of reality has to return to the industry," said Gartner senior analyst Andrew Norwood. Step forward, Hynix? If the debt-ridden Dramurai is going to go down, it will happen early next year. And it may not be the only one. Mergers and deaths should stabilise the market for those companies left standing, and the price decline should then level of during Q2 2002. ®

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