August 13, 2007
Second-Half Rebound Forecast for DRAM Market
Following the most painful half-year of DRAM market deterioration since the great collapse of 2001, a feeling of dread has given way to cautious optimism that the 2H07 DRAM market will bring better results. DRAMs were essentially selling at "give-away" prices in May and June, but evidence suggests that the market, and free-falling ASPs, turned the corner in July and will begin an upward climb resulting in increases in quarterly growth through the balance of 2007 (Figure 1).
Second-half optimism can be linked to the typical back-to-school and seasonal holiday demand, but other specific reasons include:
As much as the DRAM price erosion hurt suppliers, end-users took advantage of the low prices for high-density parts and stocked up in 1H07. This trend will continue into the second half of the year. DRAM shipments are forecast to reach 3.0 billion units in 3Q07 and 3.3 billion in 4Q07. For the year, DRAM units are forecast to increase 49%. Shipments of 512Mb devices in 2007 are forecast to surpass total DRAM unit shipments for all of 2006. DRAM bit volume is forecast to surge 81% in 2007, the highest percentage increase since the 88% increase recorded in 1998.
Though it was a very difficult six months for DRAM suppliers in the first half of 2007, supply-demand balance appears to be returning to the DRAM market in the second half of the year.
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