Contract DRAM prices have remained flat since the beginning of September, indicating the next wave of demand following the back-to-school season has yet to materials, iSuppli Corp. said today.

The market research company had expected DRAM prices to begin to rise in October following a flat September, as the seasonal Christmas build got underway. Many equipment industry players have been suggesting this fall that Christmas and Chinese New Year demand would come on the heels of back-to-school, making for a strong Q4.

But that doesn't seem to be happening, at least for DRAM, as inventory build-up and slower buying activity lingers. "Although iSuppli believes a pre-Christmas demand still could materials, present market conditions and pricing trends appear more pessimistic than iSuppli expected," iSuppli analyst Nam Hyung Kim stated in a research note.

iSuppli said it had been skeptical of the recent improvements in the DRAM market, suggesting that they were based on supply constraints and speculation of the future market, rather than true demand, leading to an inventory build, and throwing off typical market patterns. While the last month of the quarter usually is the strongest month for DRAM, the past two quarters, the middle months, May and August, proved the peak months of the quarters.

"The weak sales at the beginning of October make sense, since OEMs bought most of the DRAM they needed to fulfill near-term demand at the end of September," Nam Hyung Kim said. "However it will be critical to see whether pre-Christmas sales momentum begins to build by mid October."

Unless strong momentum occurs, iSuppli's present DRAM forecast of 8.3 percent growth this year to $16.7 billion is likely to come true, compared to 35 percent growth last year.

By: DocMemory
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