Report: DRAM Makers Must 'Reduce or Retire'

PC builders continue to jump for joy at the rock bottom prices of memory, leading to an easy decision to go with a 4GB kit in lieu of a 2GB kit of RAM. Never has memory been so cheap, and some say the market for memory makers is the worst it has been in 15 years.

And therein lies the problem. While end users are celebrating low prices, DRAM makers have been cutting back production, reducing workers' hours, and laying off employees all in an attempt drive prices back up and cope with decreased revenue. But it isn't enough, and now it appears that memory makers have reached a crossroads.

"We believe that the DRAM industry has entered the key adjusting stage of 'reduce or retire,'" DRAMeXchange stated. "The big scale reduction is now in progress and even some DRAM vendors will be out of the DRAM market in 2009. This adjusting wave will continue until the demand and supply come to balance."

According to DRAMeXchange, the cash cost of the market's 70nm technology is between $1.3 and $1.5 and is expected to drop to $1.0 to $1.2 as DRAM makers migrate to the 6x nm process. Total 12-inch wafer output continues to fall, with the reduction for November expected to be 125,000 less wafers, which is equivalent to 10 percent of the total 12-inch wafer output. The situation looks to get even worse in December, with another 17,000-wafer reduction expected, with more reductions possible in January.

"We expect the oversupply situation will be eased starting from the end of Q1 2009," DRAMeXchange said. "Therefore, the DRAM price may have a chance to rebound at the end of Q2 09 and Q3 09 with the rising demand of PC OEMS."

The question is, which memory makers will be left standing by then?