IC Insights: DRAM growth fell fast in 2007
Among the top 50 semiconductor companies, the growth of DRAM suppliers ranked first in 2006, but fell to worst place in 2007. Beyond this year, prospects improve, market researchers at IC Insights say.
By Ann Steffora Mutschler, Senior Editor -- EDN, February 18, 2008
On the heels of one of the best years for DRAM suppliers in 2006, and emphasizing the 39% drop in the overall average selling price of DRAM last year, many DRAM manufacturers ranked among the worst performing companies in terms of revenue growth last year, as shown by final 2007 sales results from semiconductor suppliers, market research company IC Insights reported.
When considering annual growth rate, IC Insights noted that DRAM companies occupied the last 4 positions among the 50 largest semiconductor suppliers in 2007, which is nearly a complete reversal from 2006 when 7 of the top 10 companies, as ranked by growth rate, were DRAM suppliers.
Among the top 50 semiconductor companies in terms of sales, ProMOS ranked first in 2006, but 49th in 2007. Powerchip sank from number 3 in 2006 to number 47 in 2007, while Nanya fell from number 5 in 2006 to number 50 in 2007. Qimonda dropped from number 6 in 2006 to number 48 in 2007.
Bucking the trend of negative growth was Hynix and Elpida, each of which posted double-digit revenue increases in both 2006 and 2007. Hynix' growth rate placed it at number 10 in both 2006 and 2007, while Elpida slipped from number 2 in 2006 to number 17 in 2007.
Looking ahead, the outlook for the DRAM market and for most DRAM vendors in 2008 does not improve much, IC Insights believes since the current difficult pricing/profitability situation facing many DRAM suppliers will likely extend to mid-2008.
After mid-year, seasonal market conditions should bring some relief in the form of upward pricing, and even though the company expects relative pricing stability to return, the overall DRAM market is forecast to decline 7% in 2008.
On a long-term basis, demand for DDR3, for 1Gb-based modules, and the increasing DRAM content per PC suggest that demand is expected to remain solid through this year and beyond.
While, many DRAM suppliers have planned significant reductions in capital expenditures for 2008, assuming DRAM vendors don't break rank and actually stick to their capex plans, which is an assumption by IC Insights, capacity could grow tight throughout the next 3 to 5 years, driving DRAM prices upward.
