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Global chipmakers on track to achieve sales targets: report

The global revenue of computer-memory chipmakers would remain on track to achieve sales targets for this and next year, despite less-than-expected earnings reported in the third quarter and worsening business conditions, according to research house iSuppli Corp.

"Fundamental supply and demand factors remain sound," the El Segundo, California-based research institute said in a report released over the weekend.

Inventories

The research house said inventories at manufacturers of dynamic random access memory (DRAM) chips remain low.

"Suppliers are still carrying lean inventories. Tier-one DRAM suppliers continue to deal with a tight supply situation," iSuppli said.

The so-called tier-one suppliers include global leaders Samsung Electronics Co, Micron Technology Inc, Infineon Technologies AG and Hynix Semiconductor Inc.

Worldwide DRAM market revenue grew by 0.7 percent in the third quarter compared to the second quarter, far lower than iSuppli's previous estimate of a 7 percent sequential rise, due to the average selling price (ASP) declining by 10 percent after slower-than-expected density and technology migration

High Growth

The research house predicted that the DRAM market worldwide will continue to enjoy high growth of 56.2 percent to reach US$26.7 billion this year.

But iSuppli warned that the growth rate would substantially slow down to a marginal 1.3 percent to US$27.0 billion next year, over the concerns of technological migration and a changing global economic climate.

"DRAM makers are facing challenges, including a transfer of production to non-DRAM parts like flash memory and CMOS [Complementary Metal-Oxide Semiconductor] sensors," iSuppli said in the report.

"Beyond that, tier-one DRAM suppliers in 2005 would migrate their process technology to 90nm, which will result in lower-than-expected output," it said.

Credit Suisse First Boston said in a research report last month that revenue from DRAM sales worldwide will fall 10 percent next year to US$24.5 billion, partly because of an estimated 39 percent drop in prices.
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