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The DRAM oversupply debacle is now not expected to correct itself until the second half of 2009, according to Nam Hyung Kim, Chief Analyst, memory ICs, at iSuppli Corp. Capital spending cutbacks seen at the beginning of the year, coupled to further reductions seen for the second half of 2008 are not sufficient to stem overcapacity in the third quarter of 2008, resulting in price declines even during the greatest quarter of demand. This has had an impact on rising inventory levels, Kim said.

“The average DRAM contract price is expected to decline by more than 10 percent from the current level by the end of the third quarter,” predicted Nam Hyung Kim, director and chief analyst, memory ICs, at iSuppli. “The inventory level in the channel and among PC OEMs has increased compared to the second quarter. Global economic conditions are adding more uncertainty on the demand side of the equation.”

iSuppli’s preliminary estimate is that DRAM unit shipments have increased by 15 percent in the second quarter compared to the first, which was much higher than iSuppli’s anticipated 10 percent rise.

According to Kim, NAND flash suppliers have cut capital spending and fab expansions, which will see one more quarter of price declines before pricing begins to improve