DRAMeXchange Predicts More Gloom and Doom in the DRAM Market

Paul Lilly

With all the damage caused by the flooding in Thailand, it's a terrible time for your mechanical hard drive to give up the ghost. HDD prices have shot way up and show no signs of coming back down anytime soon. But if your system memory coughs up a hairball, you're in luck, assuming you don't make a living building DRAM. According to market research firm DRAMeXchange, the DRAM outlook is still looking "gloomy."

DRAM contract prices have been stable since October due to peak season demand, DRAMeXchange says . But with the flooding in Thailand disrupting HDD shipments and the PC market as a whole, an oversupply of DRAM becomes an even bigger problem for memory makers.

So far this month, the contract price for 2GB DRAM modules has hovered at $10, and the average selling price (ASP) of 4GB modules has fallen 2.56 percent to $18.50. OEMs haven't been restocking their inventory, and since there's already an oversupply of DRAM, contract prices are likely to fall even more.

"With the severe oversupply situation, top-tier manufacturers like Samsung dominated over other makers in terms of profitability due to their superior process technology and vertical integration strategy," DRAMeXchange said. "Presently, they are still profitable and turning in positive financial reports. On the other hand, since other DRAM makers’ process technology is not as advanced as top-tier manufacturers, as DRAM price continues to fall their top priority is to decrease cash outflow. The other options are to become a dedicated foundry or reallocate capacity to favor server or mobile DRAM, in order to survive the harsh climate of the current DRAM market."

Looking ahead to 2012, DRAMeXchange forecasts bit growth of 28 percent year-on-year, down way below the usual 40-50 percent growth rate of past years.

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