Business & Finance
News
11/14/2007
01:39 AM
Connect Directly
RSS
E-Mail
50%
50%

iSuppli Downgrades Rating Of Memory Market

The major cause of the price decline is a continuing oversupply of parts, the industry analyst firm asserts.

ISuppli on Tuesday downgraded its rating for near-term conditions of the DRAM and NAND flash markets to "negative" from "neutral," citing an oversupply and plunging prices. The downgrade applies to conditions faced by suppliers of the electronic components.

The global average selling price for 512Mbit NAND flash is expected to drop to 46 cents this quarter, down 24% from 60 cents in the previous quarter, iSuppli said. In contrast, the 512Mbit NAND ASP increased in price in the second quarter.

"The major cause of the price decline is a continuing oversupply of parts," Nam Hyung Kim, director and chief analyst for memory integrated circuits and storage systems at iSuppli, said in a statement. "The oversupply is being caused mainly by the South Korean memory manufacturers shifting production capacity from DRAM to NAND.

DRAM is a memory component found in computers. NAND is a type of memory found in USB flash drives.

The DRAM market is also in the dumps, with prices deteriorating since September. Pricing for 512Mbit double data rate 2 (DDR2) DRAM declined in the Asia spot market to less than $1 this week. The drop is likely to result in most DRAM suppliers posting losses in the fourth quarter. The DRAM industry's average operating profitability is expected to continue to be negative in the first quarter of 2008, the fourth consecutive quarter in the red.

Despite the current doldrums, iSuppli is cautiously predicting a slow improvement of market conditions over the next few quarters. DRAM is expected to recover first, allowing most suppliers to achieve an operating profit in the second quarter of 2008. The NAND market, however, is expected to continue deteriorating through the second quarter, before recovering in the third quarter.

"The DRAM recovery will be driven by the supply side, with inventory dwindling and growth in bit production decreasing," Kim said. "This will cause availability to tighten and prices to rise."

That scenario, however, depends on suppliers behaving rationally, and not engaging in any massive production increases, which could send DRAM pricing into a new dive, Kim said. "Any irrationality could drag out the market recovery."

Comment  | 
Print  | 
More Insights
IT's Reputation: What the Data Says
IT's Reputation: What the Data Says
InformationWeek's IT Perception Survey seeks to quantify how IT thinks it's doing versus how the business really views IT's performance in delivering services - and, more important, powering innovation. Our results suggest IT leaders should worry less about whether they're getting enough resources and more about the relationships they have with business unit peers.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Must Reads Oct. 21, 2014
InformationWeek's new Must Reads is a compendium of our best recent coverage of digital strategy. Learn why you should learn to embrace DevOps, how to avoid roadblocks for digital projects, what the five steps to API management are, and more.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
A roundup of the top stories and trends on InformationWeek.com
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.