iSuppli downgrades DRAM and NAND market ratings
"In the high-flying DRAM market, conditions for suppliers reached an optimal level in September. Because of this, the DRAM industry has nowhere to go but down, prompting iSuppli to cut its evaluation of market conditions for suppliers to "neutral," down from "positive" before," said Nam Hyung Kim, director and principal analyst with iSuppli. "In the struggling NAND flash memory market a recent price rally will soon come to an end, causing iSuppli to reduce its rating to "negative," down from "neutral" before."
iSuppli's new Momentum Indicator shows that DRAM prices peaked in September, ending a solid quarter of increases. The Indicator also shows that in September overall DRAM market conditions for suppliers were at their best level since April, 2004. The Momentum Indicator takes into account a variety of factors, including prices, inventories and other market trends.
However, the latest reading of the Momentum Indicator shows prices soon will begin to decline. Since the third quarter, memory makers have been switching some production from NAND to DRAM. Furthermore, production of Double Data Rate 2 (DDR2) SDRAM is increasing among suppliers, which will result in greater availability of DRAM shortly. This is expected to cause the overall DRAM Average Selling Price (ASP) to decline by 7 percent in the fourth quarter compared to the third.
The DRAM market's moment in the sun was all too brief; iSuppli just one month ago raised its estimate of industry conditions to "positive." However, the quick revision of iSuppli's rating merely reflects the volatile market conditions for this volatile form of memory.
Despite this, 2006 is shaping up to be a better-than-expected year for the DRAM market. Worldwide DRAM revenue growth will rise to 24 percent in 2006, followed by 16 percent growth in 2007 iSuppli's forecast for DRAM and NAND flash revenue is presented in the table.
