DRAM Makers Fear Another Crisis if Demand Stays Weak

Paul Lilly

DRAM makers have been through some tough times in recent years. That's true for nearly the entire tech industry, but the DRAM market in particular was hit hard by the global recession and reduced spending. An oversupply of chips and continued weak demand forced some DRAM makers to be on the brink of collapse , while others sought a government bailout . One firm asked workers to take unpaid leaves to keep from going out of business. At one point, A-Data chairman Simon Chen declared that the DRAM market was the worst it has been for 15 years.

That all happened back in 2008 and through most of 2009. Here we are approaching 2011 and while the situation is improved, there's a lingering fear that the DRAM market could collapse all over again. Scott Chen, vice president of Kingston, believes that DRAM makers could go through another crisis like the one above if demand doesn't pick up in the next 3-4 quarters.

Part of the problem is that DRAM makers can't seem to catch a break. Weaker than expected demand from the Chinese market is taking its toll, and prior to that, it was the European bond crisis. Going forward, analysts predict slow sales in the fourth quarter in China, which has traditionally been the high season.

DRAM makers will have to figure out a way to cope with yet another period of dormant sales. Kingston's strategy is to avoid any kind of capacity expansion, even if orders for DRAM modules and NAND flash products continue to grow. Should that happen, Kingston will look at outsourcing.

Image Credit: Samsung via pclaunches.com

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