Over capacity and low ASPs are not about to disappear in both the NAND and DRAM markets, anytime soon, according to Nam Hyung Kim, director and chief analyst for memory ICs and storage at iSuppli. Kim claims that 1Gbit DRAM will exceeded demand by an average of 14% during the first three quarters of 2009, while DRAM prices would need to rise by 200% before Taiwanese memory manufacturers for example, could see profitability again.
A further round of production cuts is being forecasted in the second quarter of 2009, which could then positively impact suppliers’ balance sheets late this year or early in 2010 at the earliest, noted Kim.
“Even if all of the Taiwanese DRAM suppliers idled all their fabs, which equates to 25 percent of global DRAM megabit production, the market would remain in a state of oversupply,” Kim said. “This illustrates that the current oversupply is much more severe than many suppliers believe—or hope.”
The NAND flash memory market is in a slightly better position but the fundamentals are similar. Over capacity remains, though channel inventory is declining according to iSuppli. However, fundamental demand conditions in the consumer electronics market have not improved due to the global recession. Pricing for NAND since January has been better than iSuppli had expected. iSuppli said that this doesn’t signal a real market recovery.
“Production cuts undoubtedly will have a positive impact on the market in the future. However, it’s too early for to celebrate. iSuppli believes the surge in optimism is premature. Supplier must be rational and watch the current market conditions carefully to avoid jumping to conclusions too quickly,” noted Kim.