Dataquest: DRAM market to shrink by 55 per cent in 2001

Worldwide DRAM revenue is projected to fall from $US31.5 billion in 2000 to $14 billion in 2001, according to the study's author, Andrew Norwood, a senior analyst for the UK division of Dataquest, a unit of Gartner.

"It all comes down to pricing and this year DRAM prices have collapsed," Norwood said. DRAM pricing has declined by about 80 per cent in the past 12 months, he added.

DRAM chips are used as the main memory inside personal computers and their prices have been falling since the middle of last year, when PC sales started slowing down and inventories began to build up at the chip makers.

"The industry always suffers boom and busts, with two types of busts: overcapacity and lack of demand. While the DRAM market has been experiencing difficulties with overcapacity for the last few years, this year the problem has been compounded with a serious lack of demand in the PC market, which is significant since the PC market accounts for 65 per cent of the DRAM market, Norwood said.

All of the major players in the market such as LG Electronics, Hynix Semiconductor (formerly Hyundai Electronics Industries), Micron Technology, Samsung Electronics, NEC, and Rambus have been reporting significantly lower earnings for the year.

In February, the spot price for benchmark 128M-bit DRAM chips, was approximately $4.50, according to memory chip market data provider Independent Commodity Information Services - London Oil Reports (ICIS-LOR).

This week, the spot price for the 128M-bit DRAM chips dipped below the $2 mark, with contract pricing falling below the cost of production for most manufactures to under $3 per chip, Norwood said.

"In order to recover, we would have to see cutbacks by the major players. And since the top five DRAM producers have over 76 per cent of the market, it won't make a difference unless the big guys cut back production," Norwood said.

"The problem is that they are all afraid of losing market share and no one wants to blink first," Norwood said.

Some DRAM chip makers are hoping that the launch of Microsoft's Windows XP operating system, slated for October 25, will give a boost to flagging sales. But as Norwood pointed out, that had also been the hope with the releases of Windows 95, 98 and 2000, and such gains never materialised.

"In order for Windows XP to make a difference to the DRAM market, you'd have to see everyone tripling their DRAM and that doesn't look like it's going to happen," Norwood said.

Norwood expects DRAM companies to continue making losses into 2002 when he predicts that the companies will finally be forced to cut back on production and lower growth. "Next year should be a transition year and by 2003, the market should see the strongest DRAM market growth since the early 1990s," Norwood said.

Meanwhile, those looking to buy extra memory for their personal computers can celebrate, Norwood points out in the study. An end user adding an extra 128MB of memory will have to pay less than $20 for a memory module, when the same memory module last year would have cost as much as $120, Norwood said.

Join the PC World newsletter!

Error: Please check your email address.

Struggling for Christmas presents this year? Check out our Christmas Gift Guide for some top tech suggestions and more.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Laura Rohde

PC World

Most Popular Reviews

Follow Us

Best Deals on GoodGearGuide

Shopping.com

Latest News Articles

Resources

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Latest Jobs

Shopping.com

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?