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DRAM dilemma as bit growth continues

12 August 2008 | By Mark Osborne | News > Fab Management

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DRAMDespite two rounds of capital spending cuts from the majority of DRAM manufacturers in 2008, unit growth has not slowed and has exceeded forecasts from market research firms such as iSuppli Corp. This is making the third quarter look increasingly like the overcapacity situation that has dogged the sector for over 18 months is set to continue, even though demand remains robust and the peak demand period is closing in fast.

“The industry megabyte bit growth grew by a stunning 17 percent sequentially during the second quarter, blowing iSuppli’s forecast of 10 percent,” said Nam Hyung Kim, director and chief analyst for memory ICs/storage systems at iSuppli. “The unit growth doesn’t seem to be slowing down either and is even higher than that of the first quarter. The positive side is that the PC market has been sound. However, oversupply may be inevitable in the third quarter due to OEMs’ aggressive inventory build-up during the second quarter”

According to Kim, ASP’s are set to decline by 10 percent in the third quarter, which will cause further pain for the sector still struggling with quarterly losses.

Looking at iSuppli’s Q208 DRAM market share growth data, highlights those manufacturers still increasing production faster than there rivals, which is resulting in market share gains.

On year-to-year basis, Samsung’s growth has actually declined by 1 percent but its sequential growth is up by 13.3 percent. Samsung has 30 percent share of the DRAM market according to iSuppli.

On a yearly basis only two other manufacturers actually saw growth and these both exceeded Samsung by some margin. The fastest growth comes from Elpida, which iSuppli puts at 16 percent y-on-y. Powerchip saw growth of 10 percent. Elpida and Powerchip increased megabyte unit production by 26 percent and 38 percent, according to the market research firm.

“The market share battle between Hynix and Elpida could delay the market recovery,” Kim noted. “Elpida clearly wants to be No. 2 soon while Hynix will try to reduce its NAND growth and to increase DRAM production to retain its market share.”

All other major DRAM producers saw negative growth with Qimonda leading the pact with a 40 percent decline.

As seen in the chart, Hynix is fighting back with sequential growth of 20.1 percent as it shifts older fabs away from NAND production to DRAM, potentially adding further woes on oversupply concerns through the remainder of the year.


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