Nanya Technology expects sales of business PCs will drive demand for DRAM in the first quarter of 2005, while slow growth in DRAM supply may keep prices from dropping sharply, according to Pei-lin Pai, Nanya company spokesperson.

Pai expects DRAM oversupply in the first quarter of 2005 will be less severe than many analysts have predicted since the chip supply is expected to increase at only a slow pace through the second quarter of next year.

In the contract market, DRAM shipments to PC OEMs will be continue to be constrained by a limited testing capacity, Pai added.

Pai believes only Samsung Electronics and Inotera Memory will increase their 12-inch wafer starts on a more significant scale next quarter, while other chipmakers may seek to increase DRAM output through improved yields at the 0.11-micron node.

Including output from Inotera, Nanya’s DRAM supply will increase only 20-30% next quarter, after it grew 25% this quarter, Pai noted.

In other news, Nanya’s November revenues dropped 7% sequentially to NT$3.6 billion, amid a weak US dollar and falling DRAM prices. Pai claims a shipment delay to a customer also contributed to the revenue drop, leaving shipments for November flat at 28 million 256Mbit-equivalent chips.