Recovering for Memory Chip
ByAntone Gonsalves
InformationWeek
30, 2009 03:16 H
The globalmemory-chip market is recovering from the oversupply that hasplagued the industry for three years, prompting researcher iSupplito raise its rating for near-term market conditions to positivefrom neutral.iSuppli had maintained a negative rating for the DRAM market since September 2008 before raising it to neutral. DRAM, or dynamic random access memory, provides the system memory in PCs, servers, and other computing devices.
"With rising demand and limited supply for DDR3,the global DRAM industry is set for a sustainable recovery thatwill extend into the fourth quarter and pave the way for a robustannual increase in 2010," iSuppli analyst Nam Hyung Kim saidin a statement. DDR3 is a DRAM interfacespecification for high-bandwidth storage of the working data of a computer or otherelectronic device. DDR3 is able to transfer at twice the data rateof DDR2, enabling higher bus rates andpeak rates than earlier memory technologies. Computer makers are in the process of movingproduct lines over to DDR3, and DRAM suppliers have reported ashortage of chips, iSuppli said.
DRAM revenue fell 19.5% in the first quarter compared to thefourth quarter of 2008. However, prices started to rise in thesecond quarter, resulting in a 37.9% increase in revenue over thefirst quarter. iSuppli predicts revenue will continue to rise on asequential basis by more than 20% in the third and fourth quarters.
While rising prices is good news for DRAM suppliers, it's not sopositive for PC makers.
"Prices are rising in the third quarter, a time when DRAM buyerstypically begin to make purchases for the holiday season," Kimsaid. "Adding to the current tight supply for notebook LCD panels, the increase in DRAM prices will result in lower profitability for the PC makers in the second half of the year."
PC makers are seeing the beginnings of a recovery in their ownmarket, which saw declining sales due to the economic recession.Shipments of desktops and laptops in the second quarter fell byhalf of what was expected, according toIDC. Combined with other economic factors, thebetter-than-expected performance is an indication that the industryis poised to return to growth by the end of the year.
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