IDC Forecasts Worldwide DRAM Market Will Shrink to $24 Billion in 2001
The DRAM market will decline sharply this year. According to IDC, total DRAM revenue will reach $23.8 billion in 2001, a revenue decrease of 18% and severe 46% price erosion compared with 2000.
"The DRAM market suffers from a combination of sluggish demand in the PC industry and a harsh inventory correction in the overall supply chain," said Soo Kyoum Kim, manager for IDC's semiconductor program. "Inventory carryover will continue to plague demand and supply conditions until the middle of the third quarter, making it difficult to maintain current pricing levels. Seasonal price recovery is expected by the end of the third quarter, but will not be strong enough to turn the negative momentum of the market."
According to IDC, the average DRAM content per PC will reach 174MB - a 36% bit growth over 2000 - as a result of price elasticity. This will push overall bit demand growth in 2001 to 56% while supply will grow by 52%. Despite the small gap, lingering inventories, limited memory budgets of PC OEMs, and the lack of a new OS to drive more hungry applications on PCs will still remain as the key inhibitors to demand.
Because the prices of all standard products are approaching or have already reached below production cost, migrating to the next-generation processes will be critical for suppliers to remain competitive. Memory suppliers will also be more tactical this year as they support broader and more profitable interface products such as EDO (extended data out), PC66/100 SDRAM, DDR (double data rate), and Rambus. The mainstream 128Mb market will be the major battleground this year as suppliers shuffle for market share to hedge against price erosion.
"The DRAM industry has already lost the momentum to sustain positive revenue growth this year and in 2002, as the market enters an earlier-than- expected bust cycle. The stage is set for another market restructuring, with the winners and losers clearly being identified over the next year," Kim said. |
