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IC Insights: DRAM bit volume expected to surge 81% in 2007

Posted: 21 Aug 2007     Print Version  Bookmark and Share

Keywords:DRAM industry  2H forecast  cautiously optimistic 

Some possible short-term glitches notwithstanding, a feeling of cautious optimism has finally spread throughout the DRAM industry following a downturn in 1H 2007.

DRAMs were essentially selling at "give-away" prices in May and June, due to poor demand and a capacity glut, said Brian Matas, VP of market-research firm IC Insights Inc.

It appears that DRAMs turned the corner in July and will begin an upward climb, resulting in increases in quarterly growth through the balance of 2007. "Second-half optimism can be linked to the typical back-to-school and seasonal holiday demand," Matas said.

For 2007, DRAM units are forecast to increase 49 percent, according to the research firm. DRAM bit volume is forecast to surge 81 percent in 2007, the highest percentage increase since the 88 percent increase recorded in 1998, according to the firm.

There could be some short-term issues, however. IC Insights warned that supply growth could slow in the second half, "as some DRAM suppliers shift capacity to NAND flash, and as yield issues arise with the DRAM industry's full-out migration to the 70nm process geometry."

Average selling prices (ASP) remain a concern. DRAM ASPs jumped on the spot market after a fab power outage hit market leader Samsung Electronics Co. early this month. Samsung shut down six of its manufacturing lines Aug. 3, disrupting production of NAND devices, DRAMs and LSI chips. Power was restored by Aug. 6,but the disruption cost the chipmaker some Rs.165.84 crore ($41 million) in business.

Samsung claimed that the fab outage had a minor impact on its overall DRAM and NAND flash production. But for the seven-day period, ended Aug. 10, spot prices for 512Mbit DDR2 parts jumped by about 8 percent over the previous period, according to Gartner Inc.

The fab outage is good and bad news for the industry. The mishap comes at a time when OEMs and DRAM makers are negotiating contract prices for August. DRAM makers hope to raise the contract prices for the month, but OEMs are reluctant to pay a premium, according to Gartner.

On the other hand, demand seems to be growing. PC shipments are projected to increase 12 percent in 2007, with the average system forecast to contain 1.4Gbit of DRAM, an increase of 75 percent over 2006, according to IC Insights.

The average system memory per PC is expected to grow from 1.3Gbit in Q2, to 1.4Gbit in Q3 and 1.6Gbit in Q4, according to IC Insights. Some DRAM vendors believe that as many as 45 percent of PCs shipped by year's end will contain 2Gbit of DRAM, the amount required for optimal performance using the Vista OS, according to the firm.

"Strong specialty-DRAM demand driven by handsets and game consoles will also help boost DRAM demand," according to the firm.

"Meanwhile, increased DRAM content in new-generation handsets and other personal mobile products will generate more growth opportunities for DRAM suppliers."

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