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NAND & DRAM markets to remain profitable in 2006, says iSuppli |
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Mar 28, 2006 at 05:04 PM |
 iSuppli Corp has revised both its DRAM and NAND Flash memory forecasts for 2006 due to changing market conditions for both major memory types. iSuppli has trimmed its NAND flash market revenue forecast to $13.8 billion for 2006, which is down from its previous projection of $16 billion.
With DRAM, the market research firm now expects revenues to rise 6.2 percent in 2006 after previously projecting a 5 percent decline for the year. Worldwide DRAM revenues are now expected to rise to $26.4 billion in 2006, up from $24.8 billion in 2005.
While growth will fall short of iSuppli's previous forecast of a 49 percent expansion, the global NAND market still will rise by 28 percent in 2006, up from $10.7 billion in 2005, which according to the research firm is still one of fastest growing markets.
"Recent price declines have spurred pessimism regarding NAND flash pricing and revenue growth in 2006," said Nam Hyung Kim, principal analyst with iSuppli. "Despite this, iSuppli remains optimistic about worldwide NAND market growth this year-and about conditions for suppliers. The main reason iSuppli is maintaining a positive view is that growth in the NAND flash market is not driven by trends in pricing, but rather by the explosive expansion in unit shipments," Kim noted. "For example, Average Selling Prices (ASPs) for NAND parts declined by about 55 percent in 2005-yet the NAND industry as a whole generated an estimated $3.7 billion in operating profits last year, representing an operating margin of 35 percent for suppliers. That's a whole lot of profitability."
Kim expects another 55 percent ASP decline this year, though this will not be enough of a fall to push NAND manufacturers into a loss making position.
Key to iSuppli's significant u-turn on DRAM revenues for the year was due to the short supply of some DRAM types allowing manufacturers to actually raise prices in January and February 06. However, the research firm believes that further rises are unlikely due to better supply and demand balance.
 
 
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