DRAM price reductions to slow in 2012

According to IHS, the global average decline in pricing for dram slowed to 12% in the second quarter of 2011, following a drop of 14.2% in Q1. The research firm predicts that the rate of decrease will decline to 9% in the third quarter and then drop to 4% in Q4. The rate of decrease is then expected to slow further to just 1% in the first quarter of 2012, and then remain in the 3 to 4% range during the rest of 2012. Dee Nguyen, memory analyst at IHS, claims the slowdown in price reductions parallels a deceleration in the rate of migration to more advanced lithography used for manufacturing dram. "In the wake of forcefully pursuing lithography reductions in late 2010 and early 2011, the dram industry is expected to employ a less aggressive approach to lithography migration throughout the rest of the year," said the analyst. "DRAM capital expenditures are expected decline by 30% in 2011 compared to 2010." As a result, Nguyen expects the rate of dram cost reductions to slow during the remainder of 2011 and 2012. However, dram cost reductions are then projected to speed up again in 2013 as lithography shrinks return, due to increased capital spending. "Spending will increase by 23% in 2012, which may spur steeper price reductions in 2013," he concluded.