DRAM Bulletin: Q3 ends with a whimper
Asian holidays keep market slow
by Nam Hyung Kim
Silicon Strategies
10/01/2004, 6:39 AM ET
The following column was provided by Nam Hyung Kim, a principal analyst with iSuppli Corp., an El Segundo, California-based market research firm.
Despite a rise in spot-market prices this week, the worldwide DRAM market ended the third quarter in the doldrums due to holidays in Asia.
South Korea's three-day Thanksgiving holiday from September 26 to 28 put a hold on activity in the Asian DRAM spot market through the middle of this week. Meanwhile, the upcoming Chinese holidays in early November will keep DRAM sales activity slow over the next few weeks, especially in the spot market.
Following iSuppli Corp.'s upgrade of near-term DRAM conditions last week to neutral, up from negative previously, spot-market prices rose by a mild 2 percent on the U.S. spot market. Prices for 256-Mbit Double Data Rate 333 (DDR333) and DDR400 increased by a more robust 4 percent on the U.S. spot memory market this week.
Although there continues to be downside risk in the spot memory market, the stable pricing environment is persisting.
DRAM makers' ongoing product diversification is resulting in some tightening of supply. Growth in production of DRAM bits is likely to be less than expected in the third quarter. At the same time, demand is remaining stable.
Because of this, average selling prices (ASPs) for DRAM are expected to decline by a mild single-digit percentage in the third quarter. This marginal ASP decrease will enable the worldwide DRAM market to grow in the third quarter, with sales expected to rise by a single-digit percentage compared to the second quarter.
In the fourth quarter, declines in pricing for high-density DDR products should result in an overall single-digit ASP reduction for the DRAM market. However, iSuppli expects that prices for commodity 256Mbit DDR will increase by 5 to 10 percent sequentially in the fourth quarter as seasonal PC demand accelerates.
Demand among PC OEMs for the next-generation DDR2 SDRAM has been disappointing so far—with the exception of Dell Inc., which has adopted more of the memory than any other computer maker.
Unless DDR2 demand picks up more in the fourth quarter, the part could go into oversupply by the end of the year due to continued production increases by DRAM suppliers.
iSuppli projects that DDR2 will represent 15 percent of total DRAM sales in the fourth quarter. If demand doesn't rise to this level, overall ASPs will decrease by more than the single-digit percentage now foreseen by iSuppli.
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