14 DAY TRIAL // After some months of price, demand and supply stabilization that made computer memory manufacturers and vendors happy, it looks as if the entire market is heading towards Chaos Central again as the marketing research firm iSuppli predicts. September will mark the month when the DRAM market conditions will start turning for the worse as prices for end products are expected to drop sharply.
There is still a considerable quantity of computer memory in inventories scattered around the supply chain and this makes manufacturers take the slow approach to increasing production as there are strong signals that the price increases for LCD panels and displays prompted more and more customers to cut the RAM budget in order to buy a computer monitor. The demand drop for computer memory will prompt a price erosion and a weak pricing policy in September will produce a further price decrease during the last months of the year, according to the news site DigiTimes.
In order to stabilize the computer memory market at a level that allows them to gain at least some profits, the manufacturers took steps to decrease DRAM production and this trend is very likely to continue in 2008 when the market growth is expected to top at 60 percent while the total growth for 2007 is most likely to reach 97 percent. "By reducing their output, DRAM suppliers have helped bring about higher pricing in the third quarter," said Nam Hyung Kim, director and chief analyst for memory ICs/storage systems at iSuppli. "But OEMs and the channel are still working off the inventory oversupply left over from January, which will make it a difficult fourth quarter for memory manufacturers. Furthermore, the shortage of LCD panels is preventing white-box PC makers from purchasing more DRAM. Increasing panel prices also are slowing DRAM content growth in PCs in the third quarter."
Despite decreasing demand and falling prices, the market research firm iSuppli will not change the DRAM market rating from "neutral" to "negative" right now, after the previous update from July when the market received the "neutral" rating after a long "negative" period which translated into a very small increase in generated revenues. In fact, the global generated revenues from the computer memory market are expected to show only a two percent increase over the previous year in 2007, while the projected figures for 2008 are reaching 18 percent. One factor that could drastically change the DRAM market is the main manufacturer and supplier Samsung, which suffered from a power outage some time ago that interrupted all memory production. Samsung is now trying to increase the sales price for all its memory products in order to cover for the lost revenues.