Talk about déjà vu. it's been a rough year-plus for DRAM manufacturers, who have had to contend with an oversupply of chips, falling prices, and a global recession on top of it all. At least one vendor said the DRAM market was the worst he'd seen it in 15 years. So it's a little bit curious that after finally showing signs of a rebound, memory makers appear stoked about an expected reduction in production costs in 2010.

It would make sense, provided the savings aren't passed on to the consumer, but that's usually not the way it works. Nevertheless, as memory makers compete with each other in a race to shrink dies, production costs are set to go down pretty significantly, DigiTimes reports.

Samsung has already adopted a 56nm process for over half of its DRAM output and has been churning out DDR3 chips using 40nm technology in small volume since the fourth quarter. By the second half of 2010, Samsung is expected to be heavily focused on 40nm.

Eplida and Nanya are also flirting with shrunken dies. And according to a recent iSuppli report, the worldwide DRAM industry has the manufacturing capacity to last through 2012.

It all sounds positive, until you consider the current condition of the memory market. But hey, from a consumer side, this is gravy. Bring on the faster, less expensive DDR3 modules.

Perhaps the DRAM market is on the road to recovery after all. Business has picked up as of late, and according to Pai Pei-Lin, VP and spokesperson of Nanya Technology, contract prices for DRAM chips will continue to climb next month.

In a sort of domino effect, Pai said he expects Windows 7 to set in motion a long overdue upgrade cycle that has been stalled the past three years because of disinterest in Vista. This will mean even higher demand for DRAM chips, potentially reaching the DRAM market's peak it in 1995, and ultimately a shortage of chips in 2010 as memory makers reach their limits in capacity output.

According to Pai, DDR2 and DDR3 will likely split the market evenly in the first quarter of 2010, but their could be a pricing disparity. Contract prices for DDR2 chips have been rising since August and finally surpassed DDR3 this month, and that trend looks to continue for at least the next couple of months, Pai noted.

For probably the first time in a very long time, the future appears bright for the memory market. Either that, or A-Data chairman Simon Chen is sporting an awfully bright pair of rose-colored glasses.

According to Chen, both the NAND flash and DRAM sectors have recovered in the second half of 2009, following the easing of an oversupply of chips that previously kept prices uncomfortably low. Chen views this as a positive sign moving forward, saying the overall memory sector is expected to return to its 2006 or 2007 form in 2010.

If true, this bodes particularly well for A-Data, who has aspirations of once again reigning as the most profitable among Taiwan-based memory module companies in 2010. A-Data is planning on expanding in India, Russia, Brazil, and Mexico, and according to Chen, sales generated from the emerging markets should grow significantly in 2010.

It's hard to imagine anyone being stoked about losing $611 million in a quarter, unless you're part of a group of DRAM makers who were expecting to lose much more.

According to news and rumor site DigiTimes, Taiwan's major DRAM chip makers -- Inotera Memories, Nanya Technology, Powerchip Semiconductor Corporation (PSC), and ProMOS Technologies -- will post combined losses of more than NT$20 billion, or roughly $611 million USD, for the second quarter of 2009. As bad as that sounds, market watchers were anticipating losses adding up to NT$30.7 billion, or about $938 million USD.

And it hasn't been all losses for memory chip makers. Both A-Data Technology and Transcend Information continue to see profits for the second quarter, perhaps indicating that the worst might finally be over.