Wed, Dec 22, 1999 page17

• DRAM makers, analysts anticipate bright year ahead

  INDUSTRY OUTLOOK Taiwan's share of a US$20 billion global DRAM market could reach 20 percent, up from 12 percent this year

  • By Simon Burns / STAFF REPORTER
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  DRAM makers and industry analysts expect a bright future for Taiwan's manufacturers as the DRAM market emerges from a three-year slump.

  "Next year will be very good for the DRAM business, simply because demand will be much higher than supply," said Hander Chang (張-P遠), assistant vice president and spokesman for Winbond Electronics (華?1q?l).

  Winbond, Taiwan's largest DRAM maker, holds an estimated 5 percent of the global market.

  DRAM memory chips are used in personal computers and in many other electronic devices. Taiwan currently supplies around 12 percent of the worldwide market, which was worth more than US$16 billion this year.

  Next year, the global market is expected to exceed US$20 billion, and Taiwan's share of the bounty could rise above 20 percent, analysts say.

  "I expect the DRAM industry to see significant growth for the next three years," said industry analyst Eric Wang of ABN AMRO. "All the producers will benefit from an upturn in the cycle. In the short term, however, in the next three months I see a lot of pressure on the price."

  Wang said greater supply in the market over the next three months would put downward pressure on prices. "However, the price will come down, but not collapse," he said.

  Wang said he believes manufacturers will hold onto extra inventory during the next few months and will use it to even out dramatic price swings on the spot market.

  Some analysts anticipate that ongoing stockpiling of memory chips by buyers concerned about possible Y2K problems could lead to a slump in orders in the first quarter next year, traditionally a period of low demand.

  Winbond's Chang sees potential problems later in the year, however. "The end of the second quarter, maybe April or May might be a little bit slow," he said. "But after that, we think there will be high demand."

  The release of Microsoft's Windows 2000 operating system, expected early next year, will help drive DRAM sales, he said. "Windows 2000 will have a positive influence," he said, because "you need more DRAM to support all its features."

  Microsoft will probably recommend a minimum of 128 Megabytes of memory for PCs that use Windows 2000.

  DRAM production is dominated by Samsung and Hyundai of Korea, and Micron Technologies of the US. Between them, the three companies produce about 70 percent of global output.

  Taiwan's DRAM makers may benefit next year because, unlike Samsung and others, most have steered clear of the troubled Rambus memory format, which has been hobbled by technical problems.

  The global memory chip market is expected to grow 33.5 percent next year, according to Semico, a US research organization.
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