The market for computer memory chips is finally recovering after a slump of more than two years, but industry experts warned yesterday of a rapid return to recession if chipmakers in Taiwan and South Korea pump out too many chips.
\nThe global market for the most popular dynamic random-access memory (DRAM) chips -- used in devices as diverse as computer printers, advanced mobile phones and DVD players -- is expected to reach US$18.9 billion this year, up 21.8 percent from last year, the US-based research firm Gartner Inc reported yesterday.
\n"This recovery is going to be based on lack of supply, not increasing demand," said Andrew Norwood, principal analyst for Gartner's semiconductor research group, said in the report.
\n"We have been here before, and if the DRAM vendors become greedy and increase production, the industry will quickly swing back into oversupply and prices will crash," he said.
\nBEFORE THE DELUGE
\nMemory-chip prices plummeted in 2001 as an increasing number of manufacturers in Asia cranked up production and flooded the market.
\nSince then, the market has seen prices rollercoaster as advanced and more expensive products brought a brief recovery for industry leaders, only to be followed by a crash in prices as smaller competitors caught up.
\n"Stabilizing prices and lower inventories alone do not constitute a recovery in the DRAM industry," Norwood said, "but these factors combined, and the positive sentiment in the DRAM industry, point to the possibility that the DRAM industry recovery has, at long last, begun."
\n"Recent cuts in planned DRAM supply by major vendors have set the industry up for a possible shortage. If this happens, it will mean a return to profits for vendors and strong revenue growth," Norwood said.
\nA supply shortage is not enough to sustain the recovery, another analyst said.
\n"Our PC analysts haven't seen a great surge in demand for PCs, so some people are being a little overzealous about a recovery," said Paul Hsu (
UPGRADE AND TRANSFORM: Although the cross-strait trade deal might remain, the Ministry of Economic Affairs said businesses should prepare for any disruptions Taiwan might face a decline in foreign trade with China if the cross-strait Economic Cooperation Framework Agreement (ECFA) ends this year, Minister of Economic Affairs Shen Jong-chin (沈榮津) said yesterday. The agreement, which was signed and put into effect in 2010 to reduce trade barriers across the Taiwan Strait, is expected to end this year, despite not having an exact termination date. “We have not received notification [from China] that it wishes to terminate ECFA,” Shen told reporters prior to attending a meeting at the Legislative Yuan. “Even if we are notified, the agreement would only cease after six months.” While acknowledging the
The Ministry of Economic Affairs yesterday gave the green light to Good Way Technology Co’s (東碩資訊) application to invest up to NT$700 million (US$23.1 million) in Taiwan under a three-year program that provides incentives for overseas Taiwanese companies to invest back home. Good Way, which specializes in docking stations and counts Intel Corp among its major clients, plans to set up a manufacturing facility in New Taipei City’s Sijhih District (汐止), the ministry said in a statement. Good Way, which has a research and development facility in Taiwan and only one manufacturing plant — in Kunshan, China — decided to expand its
Novartis AG chief executive Vas Narasimhan said his Sandoz generics unit’s malaria, lupus and arthritis drug hydroxychloroquine is the company’s biggest hope against COVID-19, Swiss weekly SonntagsZeitung reported yesterday. Novartis has pledged to donate 130 million doses and is supporting clinical trials needed before the medicine, which US President Donald Trump also has been promoting, can be approved for use. Other companies including Bayer AG and Teva Pharmaceutical Industries Ltd have also agreed to donate hydroxychloroquine or similar drugs, while Gilead Sciences Inc is testing its experimental drug remdesivir against COVID-19. “Pre-clinical studies in animals, as well as the first data from clinical
Business sentiment in all industries last month weakened further as the number of COVID-19 infections escalated, threatening to push the global economy into a recession, the Taiwan Institute of Economic Research (TIER, 台經院) said yesterday. The business confidence gauge for local manufacturers fell 5.31 points to 88.73 from a month earlier, the lowest since January last year, a monthly survey by the Taipei-based institute indicated. Only 19.3 percent of manufacturers remained upbeat about their business outlook in the coming six months, 6 percentage points lower from a month earlier, while companies with a gloomy outlook rose 9.8 percentage points to 36.9 percent,