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Oversupply Dram ships projected for 2003
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Thursday, December 26, 2002
DRAM chips are projected to see a significant oversupply in 2003.According to a survey conducted by Nikkei Market Access
As major DRAM makers plan to start their full operation of 300mm wafers' production lines, the total output in 2003 will likely increase 66 percent year-on-year to 816.9 petabit (Pb).
If demand also expands at this pace, the situation will not cause any problem. However, even if the PC market, which occupies a 60 percent share of the total DRAM consumption, returns to a high growth track, the total demand will be 761.2Pb at most.
In a full-year estimate, there will be an oversupply of about 7 percent. This figure appears to indicate that manufacturers carry less than a month worth of inventory. Yet, adding the stock from the end of 2002, the total will be nearly two months of inventory at the end of 2003. As for the DRAM market, it is highly probable that an inventory stock status like this will trigger a price decline resulting in a "market crash."
At present, only one fully operating production line is dedicated to 300mm wafers, where prime wafers are input at a volume of 10,000 sheets per month. Infineon Technologies AG of Germany operates this line.
However, major DRAM makers will fully operate their production lines during 2003. Using a modest calculation, there will be at least seven 300mm wafer fabrication lines put into full operation: two by Korea's Samsung Electronics Co., Ltd., one by Micron Technology Inc. of the United States, one by Japan's Elpida Memory Inc., one by Taiwan's PowerChip Semiconductor Corp., and one by Taiwan's ProMOS Technologies Inc.
Why, then, are the DRAM makers willing to increase their output even to the extent of launching new 300mm wafer production lines when they foresee an inevitable result of significant oversupply?
It is simply because they hope to maintain price competitiveness by leveraging volume efficiencies through producing a larger amount of DRAM chips at a time with large-diameter wafers. They have no option but to keep waiting for rivals to exit the DRAM sector.
This production forecast is based on an optimistic calculation of demand for DRAMs for PCs, although the market expects no significant growth of the volume of PC shipments in 2002. Specifically, it assumes that 139.7 million PC units will be shipped in 2003, up 10 percent year-on-year, and the average memory capacity per PC will be 196MB in 2002 and 294MB in 2003. Nonetheless, there will be an oversupply.
By: DocMemory
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