Study: World DRAM Market Expansion to Slow in 2001

NMA said it expects the first half of the year to be characterized by continued volatility in the DRAM market - volatility that has thrown the market into confusion in the last six months of 2000.

During that period the spot market price of benchmark 64M-bit PC100 SDRAM (synchronous dynamic random access memory) chips has fallen by more than 70 percent from a July high of around US$9 per chip. Spot market prices in Asia are currently at around $2.60 per chip, according to semiconductor market data provider Independent Commodity Information Services - London Oil Reports (ICIS-LOR), a unit of Reed Elsevier PLC.

The market volatility was due to three main factors, said NMA. Firstly, heavy buying of chips in the run up to the summer in anticipation of a coming shortage helped push up demand and prices in the summer and then, as companies began to use up stockpiled chips, led to lower demand and prices towards the end of the year.

Making matters worse for DRAM makers, a downturn in the PC market led to less machines leaving the doors of manufacturers and therefore stockpiles of chips lasted longer than expected. The third factor was that memory in PCs did not increase as much as expected as PC makers fought to keep prices down.

Better news for DRAM manufacturers however came in NMA's prediction that supply and demand will move back into equilibrium during the second half of 2001. Behind this prediction is an expectation that the amount of memory built into new PCs will increase as use of Intel Corp.'s Pentium 4 processor and the Windows 2000 operating system becomes more widespread.

Nikkei Market Access, in Tokyo, can be found online at http://ma.nikkeibp.co.jp/. ICIS-LOR, in London, can be contacted at +44-208-652-3335 or via the Web at http://www.icislor.com/.

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