SANTA CLARA, Calif. -- What happened to the DRAM recovery in 2002?
After bullish predications from vendors and analysts earlier this year, the DRAM market has sunk to a new and disturbing low in 2002. In just this week alone, the price for a 128-megabit SDRAM product on the spot market fell by up to 46.8%, according to the DRAMeXchange.COM Web site.
At the high point this week, the price for a 128-Mbit SDRAM on the spot market was about $3.10, according to DRAMeXchange.COM. Today, the price for a product ranges from $1.65 to $2.30 per unit, for a daily average of $2.03 on the spot market, according to the Web site.
There are several factors for the price drop this week, including Hynix Semiconductor Inc.'s recent decision to scrap a memory alliance with Micron Technology Inc., according to analysts. This announcement, coupled with seasonal factors in the PC market, contributed to what some believe is yet another oversupply situation in the DRAM business.
"There are a lot of DRAM products out there," said Sherry Garber, an analyst at Semico Research Corp. in Phoenix. "There is also a lot of capacity in the marketplace," she said.
But Garber believes that the current DRAM glut is only a short-term problem. "We think it's a temporary situation," she said. "We think there's a lull in the market."
The market is expected to bounce in the third quarter of this year, according to Garber.
Others analysts agreed, based on the recent pricing patterns. IC Insights estimates that ASPs for 128-megabit SDRAMs--still
considered the "sweet spot" in the market--were at $4.46 each in March after rising from $1.80 in the fourth quarter.
The low point in the downturn was in October, when some 128-Mbit chips were selling for less than $1.25, said Brian Matas, vice president of market research at the Scottsdale, Ariz.-based research firm.
The growth in DRAM revenues was much higher than most expected in the first quarter--an 82% increase to $3.9 billion in Q1 vs. $2.14 billion in Q4 of 2001--but the current "correction" in the second quarter could also end up being a surprise, Matas cautioned.
IC Insights continues to predict that steady-but-modest growth in DRAM sales will return in the third quarter and average selling prices for memories will push back up to the $4.50 range or higher at the end of 2002. Overall, IC Insights is predicting that DRAM revenues will increase 40% to $16.4 billion in 2002 from $11.2 billion last year.
"I don't think this current drop will last too much beyond the second quarter, but I'm putting in a little bit of hope in there too," Matas admitted.
It's not all good news, however. "Just when you get your hopes up, something like this happens, where prices collapse in April," he said. With the prices dropping so low, it is a big blow to some suppliers," he added.
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