In 2007 the market will go through a major pricing correction and decline by 20 percent to $19.5 billion with component pricing dropping by 50 percent, Gartner asserted. This will come after a year of weak DRAM market conditions in 2006 during which revenues are set to decline 5.0 percent to $24.4 billion and pricing to decline 37.1 percent. Gartner said it expects to see increasing amount of capacity coming on line in late 2006 as DRAM fabs are ramped up and vendors move from the 110nm manufacturing node to 90nm.

Ironically the companies in the best shape are market leaders such as Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc., which have been converting DRAM capacity to NAND flash during 2005, preventing a more severe oversupply situation in DRAM market.

Gartner’s prediction for DRAM revenues in 2005 is unchanged from previous estimates of $25.7 billion, representing a 2.3 percent revenue decline year-on-year. Average prices on a bit equivalent basis are expected to decline by 38.1 percent, slightly faster than the long-term industry average of minus 32 percent. This is due to overcapacity in the market and product mix issues resulting in the slow ramp in demand of DDR2 based devices.

Despite predicting three years of accelerating declines Gartner does not believe this would mark the beginning of the end of the DRAM market, with the memory type being replaced by more advanced non-volatile alternatives. The forecast company believes the annual DRAM market value can recover from $19.5 billion in 2007 and climb to $20.2 billion in 2010. However, this would represent a 4.3 percent compound annual rate of decline from 2004, when the DRAM market was worth $26.3 billion, to 2010, Gartner said.

By: DocMemory
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