DRAM on the Road to Recovery

While strong demand for NAND flash memory chips is expected to actually be larger than what NAND makers can keep up with, a growth is also predicted for the DRAM memory market, which, after three consecutive years of decline, will finally start growing during 2010. iSupply predicts that, using the strong fourth quarter of 2009 as momentum, the DRAM segment will finally once again see an annual revenue growth during 2010.

iSupply sees the fourth quarter of 2009 as the best period for DRAM in recent history, with revenues amounting to $8 billion for the first time since the first quarter of 2007. What is even more noteworthy is the fact that this strong performance came after the “disastrous” first quarter of 2009. Elpida was the star of this period, with a revenue of $1.7 billion (64% higher than in the third quarter) and a profit of $230 million. Besides Elpida, Micron, Hynix and Samsung also rose compared to the third quarter, by 50%, 43% and 25%, respectively.

“iSuppli believes that the DRAM market’s strong performance in the fourth quarter will not presage a downturn, such as what occurred when the Internet bubble burst in 2001,” Mike Howard, senior analyst for DRAM at iSuppli, said. “However, conditions in 2010 are radically different from 2001 when the Internet bubble burst and capital spending explosion resulted in unsustainable growth. Instead, iSuppli foresees a period where the DRAM industry will see solid revenue and steady profits as DRAM suppliers have done a good job managing manufacturing capacity.”

“This year will build on the momentum built up in the fourth quarter of 2009, when overall industry revenue increased by 40 percent sequentially,” Howard added.”Increased bit shipments combined with higher Average Selling Prices (ASPs) were the main factors driving the robust growth. ASPs climbed by 16 percent and bit shipments rose by 21 percent. The result was revenue of $8.5 billion in the fourth quarter.”

The research firm's preliminary forecast has the DRAM global revenue reaching $31.9 billion in 2010, which is 40.4% higher than 2009's $22.7 billion.