DRAM market faces oversupply
Monday 04th June 2007, 01:01:00 PM, written by Carl Bender
Following a period of aggressive capacity build-out, DRAM suppliers are
now preparing to suffer through one of their toughest quarters in
years, as lower than forecast module demand has left them saddled with
a capacity overage that has resulted in massive price reductions.
Originally pursued in anticipation of Vista's release, the increased DRAM capacity has seen spot
market pricing for 512 Mb DDR2 modules travel from ~$7 in September
of '07 to down below $2 in May of this year.
Analysts polled by Thompson Financial expect memory makers Qimonda and Micron to be hard hit, estimating losses of $0.29 and $0.17 per share, respectively; industry giant Hynix is responding by shifting DRAM-dedicated lines towards the production of NAND flash in order to mitigate risk and better capitalize on the demand being created by the mobile-media market. Analyst consensus points to blowback for equipment manufacturers such as Applied Materials and Lam Research as well, who should see orders slow down in the face of reduced capex spending on the part of the DRAM makers.
Positive aspects of the memory glut include improved sourcing costs for both the PC manufacturers and the consumer, with H-P and Dell actively stocking up on RAM to hedge against future price hikes, and enjoying the benefits of the higher margins afforded from the lowered RAM pricing in the short-term. On the consumer side, PC mega-site Newegg presently has 512MB sticks of DDR2 667 available for $17.99, and 1GB sticks available for $31.99.
Analysts polled by Thompson Financial expect memory makers Qimonda and Micron to be hard hit, estimating losses of $0.29 and $0.17 per share, respectively; industry giant Hynix is responding by shifting DRAM-dedicated lines towards the production of NAND flash in order to mitigate risk and better capitalize on the demand being created by the mobile-media market. Analyst consensus points to blowback for equipment manufacturers such as Applied Materials and Lam Research as well, who should see orders slow down in the face of reduced capex spending on the part of the DRAM makers.
Positive aspects of the memory glut include improved sourcing costs for both the PC manufacturers and the consumer, with H-P and Dell actively stocking up on RAM to hedge against future price hikes, and enjoying the benefits of the higher margins afforded from the lowered RAM pricing in the short-term. On the consumer side, PC mega-site Newegg presently has 512MB sticks of DDR2 667 available for $17.99, and 1GB sticks available for $31.99.
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