Feeds

DRAM upturn threatened by vendor ‘greed’

Softly-softly, catchy recovery, urges analyst

  • alert
  • submit to reddit

Market watcher Gartner yesterday echoed Hynix and others, and announced that the global memory business is "on the verge of recovery".

However, it forecast that the recovery will be "tentative" - it remains only a "possibility" - and warned DRAM manufacturers and suppliers not to overreact and excessively ramp up output.

"This recovery is going to be based on lack of supply, not increasing demand," said Andrew Norwood, principal analyst with Gartner's semiconductor research group. "We have been here before, and if the DRAM vendors become greedy and increase production, the industry will quickly swing back into oversupply and prices will crash."

The recovery may be slow, but Q3 will still see an increase in sales of nearly 38 per cent over the year-ago quarter, Gartner predicted. It expects Q3 DRAM revenue to hit $5.1 billion.

For the year as a whole, sales should total $18.9 billion, up 21.8 per cent on last year.

Norwood pointed to stabilising and rising prices in the spot and contract markets as a key indicator of improving trading conditions. Average selling prices will rise 20.3 per cent during the current quarter, with 256Mb parts reaching, on average, $5.55 a pop.

Keeping supply tight is crucial to maintaining that trend, said Norwood.

"Recent cuts in planned DRAM supply by major vendors have set the industry up for a possible shortage," he said. "If this happens, it will mean a return to profits for vendors and strong revenue growth."

However, the anticipated balance between supply and demand could easily swing into oversupply if DRAM manufacturers increase production top early, he added. "Any move into oversupply and the related build-up in inventory levels will have a knock-on effect on pricing. If ASPs deteriorated seriously, revenue and profits would quickly evaporate," he warned. ®

Related Stories

Chip biz recovery shuffling forward
DRAM sales to rise 35% this quarter
Hynix Q2 loss narrowed on growing DRAM demand
300mm wafers set to rise 10% in Q4

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.