DRAM sales highest in five years, says iSuppli

The DRAM industry in the second and third quarters of 2009 posted the strongest sequential growth in revenue and pricing seen in at least five years, according to market research firm iSuppli Corp. The record sales figures indicate that the market recovery is real and will likely continue into next year.

Revenue for global DRAM (dynamic random access memory) rose by 35% in the third quarter compared to the second quarter, according to a preliminary estimate from iSuppli. DRAM revenue rose 34% in the second quarter.

"Third-quarter results from major suppliers show that the DRAM industry recovery is no mirage," Mike Howard, a DRAM analyst for iSuppli, said in a statement. "The continued increase in prices comes as another indicator that the DRAM market is emerging from what has been a long and painful slump."

The last two quarters bring to an end what had been three straight quarters of revenue loss that began in the third quarter of last year, according to iSuppli.

In the third and fourth quarter of 2008, DRAM revenue dropped by 1% and then plunged 38% in the fourth quarter. In the first quarter of this year, revenues were down 19%.

At the same time, the average selling price of DRAM rose by 21% in the third quarter of 2009, following a 19% increase in the second quarter of this year.

By comparison, pricing had declined by 10% in the first quarter of 2009. The second quarter marked the first sequential increase in DRAM pricing since the fourth quarter of 2006.

The global DRAM market has been declining on an annual basis since 2007. Revenue decreased by 7.5% in 2007 and dropped by 25.1% in 2008. Despite the strong recovery in the second and third quarters, extremely weak conditions in the first quarter mean that global DRAM market revenue is set to decrease by 12.9% in 2009, according to iSuppli's preliminary estimate.

According to Howard, third-quarter earnings from Samsung, Micron and Taiwanese DRAM manufacturers point to increasing sales and further progress toward profitability.

"Samsung achieved profitability during the third quarter, while Micron's results indicate the company is on its way back to the black," Howard said. "Recent sales results from the Taiwanese DRAM companies are also positive for DRAM."

The five Taiwanese DRAM suppliers -- Inotera, Nanya, Powerchip, ProMOS and Winbond - collectively experienced a revenue increase of 15% per month for the last three months, Howard said. iSuppli expects supply levels to remain fairly consistent in the fourth quarter. DRAM demand is expected to improve in 2010 in concert with the general global economic recovery.

Computerworld

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