DRAM recovery is no mirage

EL SEGUNDO, USA: The DRAM industry in the second and third quarters of 2009 posted the strongest sequential growth in revenue and pricing seen in at least five years, indicating that the recent market rebound is real and is likely to continue into 2010, according to iSuppli Corp.

Global DRAM revenue rose by 35 percent in the third quarter compared to the second quarter, according to a preliminary estimate from iSuppli. This follows a 34 percent increase in the second quarter.

The revenue rise in the second quarter brought an end to a three-quarter losing streak that began in the third quarter of 2008. Revenue had fallen by 19 percent in the first quarter of 2009, plunged by 38 percent in the fourth quarter of 2008 and decreased by a moderate 1 percent in the third quarter of 2008.

Meanwhile, global DRAM Average Selling Prices (ASPs) rose by 21 percent in the third quarter compared to the second, following a 19 percent rise in the second quarter. Pricing declined by 10 percent in the first quarter of 2009. The second quarter marked the first sequential increase in DRAM pricing since the fourth quarter of 2006.

The figure presents sequential quarterly changes in DRAM revenue and pricing through the third quarter of 2009.

iSuppli: Sequential Percentage Change in Global DRAM Industry Revenue and Average Selling Prices (ASPs)Source: iSuppli Corp. October 2009

“Third-quarter results from major suppliers show that the DRAM industry recovery is no mirage,” said Mike Howard, senior analyst, DRAM, for iSuppli. “The continued increase in prices comes as another indicator that the DRAM market is emerging from what has been a long and painful slump.”

The global DRAM market has been declining on an annual basis since 2007. Revenue decreased by 7.5 percent in 2007 and plunged by 25.1 percent in 2008. Despite the strong recovery in the second and third quarters, extremely weak conditions in the first quarter mean that global DRAM market revenue is set to decrease by 12.9 percent in 2009, according to iSuppli’s preliminary estimate.

The market’s strong performance in the second and third quarters likely presage continued strength in the DRAM market.

“Third-quarter earnings from Samsung, Micron and the Taiwanese DRAM manufacturers point to increasing sales and further progress toward profitability,” Howard said. “Samsung achieved profitability during the third quarter, while Micron’s results indicate the company is on its way back to the black. Recent sales results from the Taiwanese DRAM companies are also positive for DRAM. Collectively, the five Taiwanese DRAM suppliers—Inotera, Nanya, Powerchip,

ProMOS and Winbond—saw monthly revenues increase rise by 15 percent per month for the last three months.”

iSuppli expects supply levels to remain fairly consistent in the fourth quarter. DRAM demand is expected to improve in 2010 in concert with the general global economic recovery.

Source: iSuppli, USA