"Going into last December, our customers were setting us up to think about a 10% down first quarter compared to the fourth quarter," said Kipp Bedard, vice president of corporate affairs. "They have revised that to think more in the down 5% to flattish" range, he said at the Robertson Stephens Technology Conference in San Francisco.

Although most of that new strength continues to come from the consumer PC and the notebook computer segments, "recently a couple of customers have mentioned a little bit of renewed corporate spending, a little bit of IT spending," Bedard added.

Megabytes-per-system is surging, according to Dave Parker, manager of investor relations. Whereas average DRAM per box was 170 Mbytes at the end of 2001, "based on what our customers tell us...we're looking at a pretty clear path to 256 megabytes per box and possibly higher" by the end of this year. Graphics memory is also surging due to the popularity of multimedia on consumer PCs, he added.

The introduction of Windows XP is a primary driver of that trend, he said. "Most of our OEMs are telling us they're not really shipping any XP-configured boxes with anything less than 256 megabytes of memory."

Despite the recent spike in DRAM prices, Parker expects that trend to continue. "Elasticity is still in place," he noted, pointing out that for just $36, a PC can go from 128 Mbytes of DRAM to 256 Mbyes.

The OEM contract price of 128 Mbit synchronous DRAM today is in the $4-4.50 range, slightly ahead of the spot price, Parker said, compared to $1.30-1.40 in early December. The double-data rate (DDR) version of that density commands a 10-15% premium over that figure, he added.

Meanwhile, 256 Mbit synchronous parts are costing from $8.50 to $12 on the spot market, depending on configuration, said Kipp Bedard.

In the current fiscal quarter, Micron for the first time will ship more bits from 256 Mbit DRAMs than 128 Mbit DRAMs, Parker said. "I would expect unit crossover sometime in the fall," he added.

DDR bit shipments are in the 30-35% range currently for Micron, he said, and could reach 50% of bits shipped by the second half of the fiscal year.

The massive drop in demand experienced by the DRAM industry last year is resulting in underinvestment in capacity, according to Parker. He estimated that $13 billion in capital spending would be needed just to maintain existing capacity, but only about $6.5 billion is expected industry-wide this year. Micron plans to spend $1 billion for capex in its current fiscal year.

Parker noted that there were about 28 DRAM suppliers in 1996, but only 14 by the end of 2001. The top five suppliers represented 80% of the market last year, and "we could have three suppliers with 70-80% market share as we exit 2002." He did not mention Micron's ongoing acquisition talks with Hynix Semiconductor.

Micron is leading the charge to 0.13-micron process technology, saying that 10% of its wafer starts are currently in that process, with 70% in 0.15-micron and the remainder at 0.18-micron. The company has begun moving the 0.13-micron process into its overseas facilities, he added.