Next Few Months Will Be Bloody for DRAM Makers

Soon, it will be a full year since the DRAM industry really started to go downhill, and analysts are, sure enough, seeing only trouble ahead for makers of memory, what with demand not getting any better.

Those in the DIY PC market no doubt feel giddy over just how incredibly cheap DRAM memory is nowadays.

Unfortunately, the low prices are a reflection of the extremely low demand that the consumer base has shown in this area.

Then again, DRAM is selling poorly in every other segment as well, and has been at it for many months, despite the measures those suffering from all this have taken.

Companies did consider options like production capacity reduction, while some even backed out of the market altogether.

Unfortunately for those remaining, there is little chance of a rise in sales, especially for the third quarter of 2011.

“Contrary to typical seasonal patterns in which prices are very soft during the second quarter, that period this year saw relatively flat, unchanged DRAM pricing compared to the first quarter,” said Mike Howard, principal analyst of DRAM and memory at IHS.

“The third quarter is shaping up to be pretty bloody for DRAM makers. The combination of inventory reductions by DRAM makers and more bits coming out of the fabs is resulting in a very soft pricing environment,” said Mr. Howard.

Shipments, at the very least, should pick up somewhat during the August-October period, but the 15.9% will not be enough to actually enable price improvements.

“Companies did not capitalize on the healthy pricing levels to increase shipments in the second quarter-which, in retrospect, may have been the best time to do so,” Howard said.

Needless to say, manufacturers will focus on digesting their current supply, although production capacity cuts are not something they relish.