LONDON The aggressive capacity cuts in DRAMs over the past few months are likely to lead to significant shortage for the parts by the end of the year, Frank Huang, World Semiconductor Council chairman as well as chairman of Taiwanese chip maker Powerchip has warned.
Huang said at a conference in Taipei, Taiwan the industry would begin to recover by the second half of this year, and downstream producers of PCs and other electronic products will face "a shortage bigger than I have ever seen in the past 16 years ... this will affect global PC shipments."
Inventories in the DRAM sector will likely be depleted by June, said Huang.
Global DRAM makers have been suffering from major losses following the plunge in chip prices from the second quarter of 2007.
This prompted the biggest manufacturers, mainly in South Korea and Taiwan, to cut production aggressively, while others, notably German DRAM maker Qimonda, is struggling with insolvency.
Huang said part of the reason for the impending shortage was that most DRAM makers would find it hard to revive production quickly. The other reason is that the "wolf has been cried too many times [on a market recovery]. Everyone is too cautious," he said.
He added Powerchip and Rexchip, its joint venture with Japan's Elpida, would wait until prices rebounded before drastically increasing production and building up inventory.
Huang suggested this expected change in the supply and demand equation would also prompt the Taiwan government to re-assess its plans to restructure the fragmented domestic industry through the creation of Taiwan Memory Corporation, a partially state-owned company aimed at ensuring Taiwan remained a competitive force in the DRAMs sector.
TMC is due to announce next week whether it will partner with Elpida or the US's Micron to achieve this goal.
Huang also played down the possibility of Elpida partnering with TMC, and said his companies would have nothing to do with the government entity. He also denied reports that Powerchip would sell its entire stake in Rexchip to its partner Elpida.
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