Firms optimistic on DRAM for 2H

By Colleen Taylor, Contributing Editor -- Electronic News, 8/16/2007

After what many analysts agreed was a brutal series of months for the DRAM market, industry research firms are now reporting a restoration of "cautious optimism" that the second half of 2007 will bring better results to the memory suppliers.

According to a report published Monday by market research firm IC Insights, DRAMs, which hit rock-bottom price points in May and June, turned the corner in terms of pricing in July and will begin an upward climb resulting in increases in quarterly growth through the balance of 2007.

The firm reported that the optimism can be linked to "the typical back-to-school and seasonal holiday demand." In addition, IC Insights said, PC shipments are forecast to increase 12 percent in 2007, with the average PC forecast to contain 1.4GB of DRAM, an increase of 75 percent over 2006, when memory per PC averaged 800MB. The average system memory per PC is expected to grow from 1.3GB in Q2, to 1.4GB in Q3 and 1.6GB in Q4. According to the firm, DRAM vendors believe as many as 45 percent of PCs shipped in 4Q07 will contain 2GB of DRAM, the amount required for optimal performance using the Vista operating system.

Meanwhile, strong specialty DRAM demand driven by handsets and game consoles will also help boost demand in the second half of the year. The Xbox 360, the PlayStation 3, and the Nintendo Wii all require a "significant amount of memory," IC Insights said. Also, new-generation cell phone handsets are set to have increased DRAM content: IC Insights forecasts an average 28MB of DRAM per cellular phone handset in 2007.

Overall, it seems, the worst of the DRAM industry's woes seem to be in the past, according to the firm. "Though it was a very difficult six months for DRAM suppliers in the first half of 2007, supply-demand balance appears to be returning to the DRAM market in the second half of the year," IC Insights said in the report.

iSuppli Corp. has similarly predicted that reduced supply growth in Q3 within the DRAM market, along with a seasonal demand pick up, will stabilize the market's conditions in the second half of the year after "clearly hitting bottom" in the first half. 

Market research firm DRAMeXchange, meanwhile, has projected that DRAM prices will actually hit a high in September.