 Although iSuppli Corp predicted that revenues for DRAM manufacturers would be worse in the second quarter than the first, the actual results proved worse! The market research firm highlighted that over-capacity was higher than expected with megabit shipments increasing by 23 percent in Q2, nearly 3 percent higher than expected.
When this is combined with the 21 percent rise in the first quarter, DRAM bit growth in the first half of 2007 increased by 89 percent compared to the first half of 2006. Not surprisingly, DRAM per-megabit Average Selling Price (ASP) plunged 39 percent in the quarter and disrupted revenue growth and market share positions as manufacturers either reduced or increased bit growth to counter market forces. According to iSuppli, Due to its low unit shipments, Elpida Memory suffered low unit shipments in the quarter which resulted in a 24.4 percent decrease in revenue, bringing an end to the company's recent market-share advances. However, this is only temporary as Elpida's new joint-venture with Powerchip—Rexchip—is expected to ramp up production faster than anticipated due to higher initial pilot run yields of its 70nm production. Another victim was Hynix, which lost its number one market position in terms of unit shipments to Samsung Electronics. Sales decreased 29.7 percent, though it captured 20.7 percent worth of DRAM sales market share during the quarter, keeping it in the number-two position in the market. Although Samsung and Hynix did not go into the red in the quarter, profits were significantly reduced. Samsung's DRAM revenue for example, declined by $419.2 million compared to the first quarter. Samsung reacted to Hynix's previous quarter gains with DRAM shipments increasing by 34 percent in Q2 giving it 28.4 percent market share, 2.5 percentage increase over the previous quarter. Micron Technology was noted by the market research firm as gaining market share in the quarter, reaching 10.1 percent up from 9.1 percent in the first quarter. This was due to a 30 percent growth in megabit shipments, according to iSuppli. The research firm believes that the bottom has occurred in DRAM over-capacity as the majority of manufacturers have announced lower bit growth projections for the remaining half of the year. Reduced supply growth in the third quarter, along with a seasonal demand pick up, will stabilize market conditions in the second half of the year, according to iSuppli. 
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