Bookmark and Share


Due to slow season, oversupply of dynamic random access memory (DRAM) and shortages of hard disk drives (HDDs) pricing of computer memory continues to decrease. The contract price of 4GB DDR3 memory module in the second half of November was down to $17.5 (-7.9%), whereas the price of 2GB DDR3 module was $9.5 (-7.3%).

According to DRAMeXchange, a research division of TrendForce, due to the weak demand for PC in November (some PC OEMs orders were even cancelled) the market remained slow. Affected by the inventory pressure, several DRAM manufacturers resorted to cutting prices. In addition, the DDR3 2GB spot price dipped 25% compared to last month, which gave the clients an edge in the contract price negotiation and in turn furthered the price drop. Although DRAM makers such as Elpida and Nanya reduced their capacities in November, the effect of downsizing will not kick in until Q1 2012. In the short term, the DRAM market will still be in a state of oversupply, with the contract price downturn most likely to continue through the end of 2011.

The contract price of DDR3 2GB dropped from $18.75 in May 2011 to the current average selling price (ASP) of $9.5, a 50% decrease; the spot price of DDR3 2GB plunged by 70% to $0.74. With price falling below the manufacturing costs of many DRAM makers, companies with weaker financial health have downsized their capacities or shifted their focuses to other sectors.

On account of its unbalanced financial condition, ProMOS was the first company to lowering the wafer start volume, which was reduced from 50K level in July to about 5K at present. As for PSC, due to the decreased orders from Elpida and the company’s increasing focus on OEM business and NAND flash products, the wafer start volume of PSC’s standard DRAM was reduced from 80 thousand per month to about 20 - 30 thousand. In light of the persisting DRAM price downtrend in the second half of October, more DRAM makers have reduced their capacities in November: Nanya not only downsized its mother plant’s wafer start volume by 20% but also reduced its wafer start volume in Inotera. Moreover, Nanya also endeavors to strengthen its consumer DRAM business in the hope of reducing its loss. The Hiroshima plant of Elpida, the first global major manufacturer to announce cutting utilization rate, is scheduled to reduce the capacity by 25%. Rexchip will decide whether or not to cut DRAM output in December.

According to TrendForce’s survey, due to the production cut in November, the global DRAM industry’s wafer start volume fell from 1.3 million wafers per month to approximately 1.1 million, representing a 16% downturn. Considering the DRAM manufacturers’ active attitude towards the 30nm and 20nm process migration and the PC slow season in the first half of 2012, DRAM is expected to continue facing a serious oversupply. Currently, the decrease on wafer start will help stabilize the price, but a balanced supply and demand hinges upon whether the global brands, including Samsung and Hynix, will also start to reduce DRAM production and whether ultrabook and Windows 8 will spur the demand in 2012. If not, the continuous production cut may trigger DRAM companies to merge, resulting in an oligopoly market. In this case, the industry will be depending on the market mechanism to weed out the weak and aid the DRAM price to rebound gradually in the second half of 2012.

Tags: DRAM, Business, DDR3


Comments currently: 0

Add your Comment

Related news

Latest News

Monday, July 21, 2014

10:32 pm | PQI Debuts Flash Drive with Lightning and USB Connectors. PQI Offers Easy Way to Boost iPhone or iPad Storage

10:08 pm | Japan Display Begins to Mass Produce IPS-NEO Displays. JDI Begins to Mass Produce Rival for AMOLED Panels

12:56 pm | Microsoft to Fire 18,000 Employees to Boost Efficiency. Microsoft to Perform Massive Job Cut Ever Following Acquisition of Nokia

Tuesday, July 15, 2014

6:11 am | Apple Teams Up with IBM to Make iPhone and iPad Ultimate Tools for Businesses and Enterprises. IBM to Sell Business-Optimized iPhone and iPad Devices

Monday, July 14, 2014

6:01 am | IBM to Invest $3 Billion In Research of Next-Gen Chips, Process Technologies. IBM to Fund Development of 7nm and Below Process Technologies, Help to Create Post-Silicon Future

5:58 am | Intel Postpones Launch of High-End “Broadwell-K” Processors to July – September, 2015. High-End Core i “Broadwell” Processors Scheduled to Arrive in Q3 2015

5:50 am | Intel Delays Introduction of Core M “Broadwell” Processors Further. Low-Power Broadwell Chips Due in Late 2014