The next three years are set to be highly profitable for the major DRAM producers, according to the latest preliminary forecast figures from market research firm iSuppli Corp. DRAM revenue is expected to rise to US$31.9 billion in 2010, a 40.4 percent increase from US$22.7 billion achieved in 2009. However, 2010 is projected to be the peak in revenue earnings over the next four years, with the chance that 2013 could lead to losses for some as revenue is forecasted to fall to approximately US$26 billion. The yearly declines in revenue beyond 2010, is attributed to falling prices as new capacity gradually comes on stream.
“This year will build on the momentum built up in the fourth quarter of 2009, when overall industry revenue increased by 40 percent sequentially,” said Mike Howard, Senior Analyst for DRAM at iSuppli. “Increased bit shipments combined with higher Average Selling Prices (ASPs) were the main factors driving the robust growth. ASPs climbed by 16 percent and bit shipments rose by 21 percent. The result was revenue of $8.5 billion in revenue in the fourth quarter.”
Due to the rapid turnaround in the fortunes of DRAM manufacturers, the market research firm believes that the good-times are here to say, certainly for the near-term.
“iSuppli believes that the DRAM market’s strong performance in the fourth quarter will not presage a downturn, such as what occurred when the Internet bubble burst in 2001,” Howard said. “However, conditions in 2010 are radically different from 2001 when the Internet bubble burst and capital spending explosion resulted in unsustainable growth. Instead, iSuppli foresees a period where the DRAM industry will see solid revenue and steady profits as DRAM suppliers have done a good job managing manufacturing capacity.”
However, with DRAM ASP’s recovering and limited new capacity available the DRAM industry could be in for a sustained period of profitability, especially following revenue declines of 3.7% in 2009, 25.1% in 2008 and 7.5% in 2007, according to iSuppli.