Sat, Nov 19, 2005 - Page 11 News List

Oversupply hurting DRAM market

AFP , TAIPEI

The medium term outlook for the global dynamic random access memory (DRAM) market is bleak with the industry dogged by oversupply, research agency Gartner Inc said yesterday.

Weak DRAM market conditions are expected to continue into next year, with revenue declining 5 percent as prices fall 37.1 percent, said analyst Andrew Norwood in a Gartner Dataquest report.

Gartner expects an increasing amount of capacity to come on line in late next year, as capacity is ramped up and vendors move to 90-nanometer technology from 110-nanometer node.

This will make the second half of the year particularly difficult for DRAM suppliers due to oversupply conditions, it said.

The market would continue to be struck by oversupply with 2007 showing no signs of improvement which could trigger a full-scale price correction with market revenue declining by 20 percent and prices dropping by 50 percent.

It expects global DRAM revenues this year to come in at US$25.7 billion, a 2.3 percent revenue decline year-on-year.

Major DRAM vendors such as Samsung Electronics Co and Hynix Semiconductor Inc have been converting DRAM capacity to NAND flash during the year, preventing a further, severe, oversupply situation in the DRAM market, it said.

South Korea's Samsung Electronics maintained its dominance of the market, but lost market share as the company focused on NAND flash production. Hynix Semiconductor remained in the number two slot with 16.6 percent market share.

"Hynix and Micron have been battling over second place in the DRAM market for two years now," Norwood said. "But Micron is now attacking Hynix on a second front -- NAND flash."

Norwood also said Taiwanese DRAM vendors were big winners in the third quarter of this year, filling the top three global places for fastest growing vendors.

"Nanya Technology Corp (南亞科技) was the star performer with its revenues leaping 37 percent," he said, while noting strong production from Inotera Memories Inc and its joint-venture with Germany's Infineon Technologies AG.

Norwood said Taiwanese vendors controlled 15.4 percent of the DRAM market in the third quarter of this year, up from 14 percent in the second quarter.

"But this strong performance is still below the previous record of 17 percent," Norwood said.

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