DRAM prices set to rebound-but market outlook remains cloudy
Dec 14, 2005
Following plunging prices and mounting losses among suppliers in the fourth quarter of 2005, conditions in the DRAM market are likely to take a slight turn for the better in the first quarter of 2006, iSuppli Corp. predicts. During the fourth quarter, prices for 256Mbit and 512Mbit Double Data Rate (DDR) SDRAM have decreased by about 20 percent. iSuppli is cautiously predicting that prices will remain on the decline through the end of 2005, before a slight rebound occurs in the first quarter of 2006. Prices will strengthen due to slowing bit production growth among DRAM suppliers. DRAM bit production is expected to grow by only about 52 percent in 2006, compared to 62 percent in 2005, iSuppli predicts. Many DRAM suppliers already are selling parts at prices below their manufacturing costs, and thus are holding the line on further production hikes and price cuts. Furthermore, leading DRAM suppliers Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc. have become more aggressive in their efforts to convert their fabs from making DRAM to producing a more lucrative product: NAND-type flash memory. While prices are expected to strengthen in the first quarter, the overall outlook for 2006 appears less positive. iSuppli now predicts the DRAM market will suffer a slight downturn compared to 2005. Global DRAM sales are expected to decline to $23.97 billion in 2006, down 5.1 percent from $25.25 billion in 2005. However, DRAM market revenue is expected to rebound in 2007, rising 12 percent to reach $26.8 billion. However, the decline in bit production growth potentially could push the DRAM market into positive territory for the year. This could drive DRAM revenue to achieve growth of as much as 10 percent in 2006, according to iSuppli's high-side forecast for the year. Despite this, iSuppli is remaining cautious regarding its outlook for 2006 until signs emerge of positive sales momentum. www.isuppli.com
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