DRAM revenue growth may have fallen short of expectations in Q3 and the near term outlook is consequently rough, the market remains on track to achieve sales growth in 2004 and 2005, iSuppli Corp. believes. 

The market research firm suggests that 2004 will represent the peak of the present DRAM growth cycle, with 2005 bringing a marked slowdown in sales. Worldwide DRAM market revenue grew by 0.7 percent in Q3 compared to Q2, far lower than iSuppli's previous estimate of a 7 percent sequential rise.

Megabit unit shipments grew by 11 percent during the quarter. However, the per-megabit average selling price (ASP) declined by 10 percent, resulting in the weak revenue growth, the research firm reported.

A slower-than-expected density and technology migration helped depress DRAM ASPs.
DRAM suppliers shipped far fewer DDR2 SDRAM and 512Mbit density parts in Q3 than iSuppli had predicted. Meanwhile, there was an oversupply of the older 256Mbit DDR parts.

iSuppli's view of DRAM market conditions, however, remains far more optimistic than the recent predictions provided by its competing market forecasters, the research firm said. It believes that fundamental supply and demand factors remain sound, and that memory chip suppliers are still carrying lean inventories. Tier-one DRAM suppliers continue to deal with a tight supply situation, iSuppli said.

Furthermore, other factors are arising that will constrain supply and support pricing, the market research firm suggests. DRAM makers are facing challenges, including a transfer of production to non-DRAM parts like flash memory and CMOS sensors. Beyond that, tier-one DRAM suppliers in 2005 will migrate their process technology to 90nm, which will result in lower-than-expected output.

iSuppli predicts the DRAM market will enjoy revenue growth of 56.2 percent to reach $26.7 billion in 2004. The DRAM market will in turn grow by a marginal 1.3 percent in 2005. 

However, there are many unknowns, such as weakening of the dollar compared to foreign currency, and the worldwide economic growth rate, which could impact the DRAM market in either direction, iSuppli noted.

By: DocMemory
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