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Jun 04, 2007 at 05:07 PM |
Rumors are circulating that Samsung had refused to play ball on further price declines of DRAM to major PC manufacturers such as HP and Dell. The result has been a suspension of supply at anything below current contract prices leaving the door open for Taiwanese memory manufacturers to offer lower prices and pick up the business.
This all indicates that Samsung is attempting to use its market share position to put a bottom on falling ASPs as DRAM falls below manufacturing cost levels.
Though Taiwanese memory manufacturers are attempting to cash in on Samsung's refusal to bid lower, I would expect this to be a limited affair as losses are not sustainable.
However, if Samsung is saying enough is enough then they are playing a very risky game as Gartner is projecting that an oversupply situation in DRAM will continue through 2007 and into the third quarter of 2008!
Oh yes, 3Q08!
As a result, Gartner says that DRAM ASPs are expected to be down 51 percent in 2007 compared with 2006.
With NAND in oversupply also, Samsung is somewhere between a rock and a hard place and rivals are lined up to jump over the cliff with them as DRAM capacity is still being added at 300mm fabs at an alarming rate.
Though yield issues are currently impacting advanced node ramp rates, that should be fixed by the third quarter of this year, with a significant bit growth scenario expected after that.
Vista has failed to spur the demand all DRAM players spouted about last year and only muted claims that the iPhone launch will eat up some NAND capacity.
No memory player has yet switched off the tools in 300mm fabs in an effort to reduce capacity yet, but if Gartner's projections ring true than there will a lot of red ink on balance sheets for this year and next.
Here's a link to one of the stories over at DigiTimes:
http://www.digitimes.com/NewsShow/MailHome.asp?datePublish=2007/6/3&pages=VL&seq=200
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