Researcher warns DRAM shortage is imminent, could last two years
By Anthony Cataldo
EE Times
(05/23/00, 12:18:13 PM EDT)
TOKYO ( ChipWire)-- In what would be the most significant DRAM market change in several years, marketresearch firm Dataquest Inc. has forecast that demand for DRAMs will exceed supply starting mid-year and won't let up until late 2002. The change could mean that allocation and long-term contract pricing will soon become the norm -- a situation that hasn't occurred since the mid-1990s.
The contract price of a 64-megabit SDRAM is in the $6.50 to $7 range today, and will likely move into the $7 to $7.50 range by the third quarter, according to Dataquest in San Jose. Based on the industry's available capacity between now and 2002, the price of DRAM should stay around $1 per megabyte or perhaps increase for the next two years, said Jim Handy, director and principal analyst for Dataquest, a division of Gartner Group.
Such a market harkens back to the mid-'90s, when the price per megabit of DRAM stayed relatively constant for about four years despite steady reductions in DRAM manufacturing costs. That stable pricing led to a huge windfall for the DRAM industry, and created a bubble that eventually burst at the end of 1995, when prices fell quickly, long-term pricing was thrown out the window, and many customers were moved to unload huge inventories of DRAMs on the spot market.
Handy called that situation an anomaly, and said there's little chance the forthcoming market will follow the same pattern. During the years between 1992 and 1995, the DRAM industry raked in $65 billion in profit. "The repeat won't be as long in duration or nearly as profitable," Handy said.
Nevertheless, Handy said he is confident the industry is on the cusp of long-lasting supply shortage that will put PC vendors, who consume 80% of produced DRAMs, on allocation. As a result, PC OEMs will soon have to start negotiating long-term pricing contracts with their DRAM suppliers, a practice PC OEMs have largely stopped since DRAM prices collapsed in late 1995.
"We're recommending for them [PC OEMs] to put long-term contracts into place," Handy said. "Short of any global financial problems, we don't expect anything to get in the way of this." |
