DRAM in strong position for 2010 says iSuppli

The market analyst reports that following a revenue low in the first quarter of 2009 - not seen since 2001 – the dram industry ended the fourth quarter at $8.7billion, up 43% from $6.1bn in the earlier quarter. Mike Howard, iSuppli's senior analyst for dram said that he considered the period as among the Top five quarters of the last decade. "The dram industry in 2009 was one of extremes," Howard said. "After dropping to revenue levels unseen in more than seven years, the dram market improved steadily throughout the year and finished strong at the end of 2009." iSuppli statistics showed that the industry realised a positive net income margin of 15% in the fourth quarter, the first after 10 consecutive quarters of negative net income dating back to the first quarter of 2007. According to Howard, a number of factors accounted for the turnaround, including increased bit shipments and higher average selling prices (ASP). With improving demand-style supply dynamics, dram pricing in the intermediate term appears to herald good prospects ahead for the industry and bode well for profitability. The improved revenue performance of the fourth quarter was said to be driven largely by a firm pricing environment, in which dram ASP reached $2.66, a 20% increase from $2.21 in the third quarter. Compared to the ASP of the fourth quarter of 2008 ($1.71), it represented an increase of 55%. Howard described the increase as, 'significant and rare pricing behaviour' and suggested that it puts the industry in a strong position going into 2010. He added: "Even if the ASP deteriorated continuously this year - which iSuppli is forecasting - prices essentially will be flat compared to year ago levels as they come off from such a peak." Among dram technologies, DDR3, which transfers at twice the data rate of its DDR2 predecessor, accounted for 35% of bit shipments in the fourth quarter. In comparison, the older DDR2 still commanded 48% of the market during the period but, according to iSuppli, is on a 'ceaseless decline'. Howard predicts that from the first quarter of 2010, the two will swap places, and DDR3 will account for the lion's share of dram bit shipments. A key factor that will keep DDR3 pricing above that of DDR2 for much of this year is the high demand profile of DDR3. "The roadmap of Intel clearly points to a DDR3 future," concluded Howard. "Already, all of the company's Nehalem-based chips run DDR3, and a DDR3-only Atom processor is also in imminent release."