DRAM inventories fall, but prices still uncertain
By Anthony Cataldo
EE Times
(04/03/01 14:58 p.m. EST)
SAN MATEO, Calif. — Six months after DRAM sales fell off a cliff, there's evidence the supply glut that preceded that fall is starting to ease somewhat while demand has started picking up again. But with the DRAM market being as fickle as it is, it's still too early to call it a turnaround, observers said this week.
At Micron Technology Inc., inventory levels have started to come down for 128-Mbit SDRAMs, the main culprit of the DRAM oversupply for the last six months. The Boise, Idaho, memory maker also said it produced 33 percent more bits last quarter than it did in the fourth calendar quarter of 2000, which showed flat bit growth.
Notebook computers and high-end PCs accounted for most of the sales increases while consumer PC and networking segments were still lagging, said Kipp Bedard, vice president of corporate affairs for Micron.
The jump in DRAM output toward the final weeks of the quarter helped Micron's semiconductor operations eke out a slight profit, though the company reported a consolidated net loss of $88 million on net sales of $1.05 billion for the last quarter.
Jim Sogas, vice president of sales for DRAM vendor Elpida Memory Inc., agreed that inventories have "cleaned up." Yet Sogas said there's still not enough evidence to suggest prices are heading north. "We're getting some demand pull from some customers in the high end, but it's not out of line with what we've been expecting," he said. "The big customers' posturing is not in line with any big increase in demand."
Up a dollar
One positive sign for DRAM makers was the sudden increase in spot-market prices for 128-Mbit SDRAMs, which rose about a dollar to just above $5 in recent weeks. Observers said the uptick was most likely sparked by the recent earthquake near Hiroshima, Japan, combined with reports that DRAM makers have been holding back on raising output and diversifying their product lines.
DRAM makers are watching the spot prices to see if they hold. Recently, the average contract price for a 128-Mbit DRAM was $4.65, said Fred Waddel, director of sales for Micron's computing and consumer division.
"We haven't seen any great trend at this point, but if spot prices continue to go up we do expect contract prices to follow," he said during a conference call with financial analysts.
But with no clear indication that demand is coming up fast, DRAM makers may have to rest their hopes on a waning supply base. The earthquake in Japan halted some production at an NEC-owned fab near Hiroshima, which supplies 128-Mbit DRAMs for Elpida, but the company promised to resume full production by this week.
Holding off on capacity increases and diverting some capacity away from DRAMs could also lift prices. Micron marginally increased wafer output from 43,000 to 45,500 last quarter. Since last summer, the company's capital-spending increases have been directed mainly at process technology shrinks.
Elpida's capacity increases have been limited to die shrinks and yield improvements. It recently broke ground on a fab in Hiroshima, but it will take a year for it to come online, Sogas said.
Despite the lull in capacity expansion, there's still incentive to keep existing fabs running at full capacity as a way to minimize manufacturing costs. "We're running at 100 percent capacity," Micron's Bedard said. |
