The good times are clearly starting to roll, according to the August update of market research company Future Horizons' semiconductor report, and DRAM pricing would seem to support that thesis.

Although June's unit shipments slipped, prices were up and the market's value rose by 9.5 per cent, said the report. Future Horizons expects the pricing growth trend to continue, forecasting 13 per cent growth in chip prices for 2003.

In general, DRAM pricing, an industry yardstick, seems to be reflecting this trend. The price of the standard 256Mbit DDR device is currently on the high side, between $4.70 and $5, according to Xavier Maillard, analyst at DRAM price trackers ICIS-LOR. ICIS-LOR is a United Kingdom-based business unit of Reed Business Information.

Meanwhile, orders are stretching out. "Q4 backlog is already strong and building; it shows every sign of exceeding expectations," Future Horizons analysts stated in their report. Without seeing a killer app on the horizon, Future Horizons points to the new mobile phones with audio and video processing, flat screens, smart cards and DVDs providing market drivers.

As for DRAM, after 10 successive quarters of losses, the DRAM industry is now making a profit on a collective basis after price hikes this spring. Future Horizons estimates the cumulative, industry-wide losses on DRAM at $20 billion over 10 quarters prior to Q1 2003.

But DRAM prices are currently at a point at which manufacturers can make decent returns; even the elderly 128Mbit device is commanding prices around $3.

"There's been an upward price trend through the summer because of shortages," ICIS-LOR's Maillard t. "Users are beginning to move way from the DDR266.

"DDR333 is becoming the main product and some are talking about DDR400. Some manufacturers such as Micron didn't invest enough in DDR333. September should be strong because of the back-to-school effect," he concluded.

At Infineon Technologies AG, the world's third largest supplier of DRAM, a spokesman confirmed the trend: "Since July we have seen a continuously growing demand and steady increase in the price of DDR, and we expect further positive development of demand mainly driven by the increasing corporate replacement investment, the on-going back-to-school situation, the move towards higher megabit-per-box, and increased demand from the introduction of Intel's Springdale technology."

In August, when prices usually fall, ICIS-LOR saw a rise in prices in the first week of the month of 3.84 per cent in the United States, 3.16 per cent in Europe and more than 5 per cent in Asia.

This would all seem to presage an uptick in PC sales, which many analysts are forecasting. But Malcolm Penn, chairman of industry analyst Future Horizons, attributed the price hike to supply shortages not so much on the volume of PCs but because of the new motherboard designs.

"The latest generation of motherboard has two banks of DRAM working in parallel, which requires twice the product," Penn said. "That is what's causing the shortage, and that is what's pushing prices up."

Another perennial factor causing shortages is that the yields on the latest, more complex products are not as good as those on the older products.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved