+44 (0)24 7671 8970
More publications     •     Advertise with us     •     Contact us
News Article


DRAM suppliers become victims of their own market share war

IT SAYS A LOT about conditions in the global DRAM market when the industry’s most notable performance in the fourth quarter was posted by Elpida whose sales declined by a double digit.

Indeed, the fourth quarter of 2007 was miserable for DRAM suppliers on a number of counts. Global revenue declined by 19 percent to $6.5 billion, down from $7.97 billion in the third quarter. Sales dropped by 40 percent compared to the fourth quarter of 2006. All of the Top-10 DRAM makers tracked by iSuppli suffered sequential declines in revenue.

DRAM market conditions in the fourth quarter were far worse than predicted, and rivalled the debacle of the second quarter of 2007, when global revenue declined by 24.1 percent on a sequential basis. The main culprit behind the fourth quarter revenue dive was a 31 percent plunge in Average Selling Prices (ASPs) compared to the third quarter. The ASP drop was partly the result of a 17 percent increase in megabyte DRAM unit production, which contributed to a glut in the market. In contrast, DRAM unit production rose by only 9.7 percent in the third quarter, and typically increases by 10 percent on a sequential quarterly basis. The DRAM industry also continues to struggle with excess inventory, which is helping to drive down pricing. The drop in market revenue resulted in an industry wide operating loss of nearly $3 billion in the fourth quarter. This represents a $6.4 billion swing in operating profitability compared to one year earlier, when the DRAM industry was in the black to the tune of $3.4 billion.

“There’s a lesson to be learned from the fourth quarter DRAM disaster: In this game of upping the production ante, no supplier wins, and the entire industry loses,” said Nam Hyung Kim, director and chief analyst, memory ICs/storage systems for iSuppli.

“Tier one DRAM makers can generate profits more than the industry average when the industry is healthy, and only when supply and demand are in a reasonable state of balance. Rather than pursuing a scorched earth policy of ramping up production to gain market share, tier one DRAM suppliers should try to return to profitability by rationalising supply growth.”

Top tier DRAM suppliers in 2007 engaged in massive capital spending programs, with the goal of cornering the market and driving smaller competitors out of the industry, Kim observed. However, even if this strategy succeeds, it will yield only short term benefits. When profitability returns to the market, new competitors will come flooding in again. “Until the suppliers change their ways, this naïve game of scale will continue to cost the DRAM industry every year,” Kim said.

The issue of profitability is becoming even more critical in the DRAM market as capital expenditure requirements grow.

Unfortunately, the DRAM industry is headed for at least two more quarters of major losses, Kim warned.


Photonis announces agreement to acquire Xenics, a leader in Infra-Red imaging solutions
Phlux Technology Secures £4m in Seed Funding
Start-ups: build up your ecosystem
Trends in the semiconductor industry
Advantest Unveils E5620 DR-SEM for Review and Classification of Ultra-Small Photomask Defects
Xenics introduces Wildcat+ 640
Advantest Introduces New inteXcell Series
Sony Semiconductor Israel Redefines IoT Connectivity Platform
Sensor Sales Stay Strong Due to Big ASP Rise
Advantest Launches ACS Solution Store to Enable Real-Time Data Analytics Solutions
Lam Research Acquires SEMSYSCO to Advance Chip Packaging
Infineon planning a major investment in a new factory in Dresden
Particle Measuring Systems introduces 10 nm aerosol particle counter
EBARA presents DYNOX Gas Abatement System
TSMC Launches OIP 3DFabric Alliance
DuPont reshapes IC materials manufacturing for post-COVID success
Evolving subfab vacuum challenges demand collaborative solutions
Next-gen low-k films can address present, future fabrication challenges
Critical Manufacturing redefines semiconductor MES for greater agility, success
Brewer Science bonding & dielectric materials deliver packaging solutions for 5G, IoT devices
Cutting FOPLP pattern distortion
EV Group advances leadership in optical lithography
ASM joins semiconductor climate consortium
KLA Launches New Double-Sided Direct Imaging Platform
Micron ships advanced DRAM technology with 1β node
Nor-Cal will do business as Pfeiffer Vacuum
ClassOne Equipment Releases Major New Lot of Used Semiconductor Tools for Resale
Park Systems Celebrates the Merger and Acquisition of Accurion GmbH
Amkor to support European semiconductor ecosystem
Nanometre components require sub-nanometre precision
ALD TechDay for More-than-Moore devices
Cadence Expands Collaboration with Samsung Foundry

Search the news archive

To close this popup you can press escape or click the close icon.
Register - Step 1

You may choose to subscribe to the Silicon Semiconductor Magazine, the Silicon Semiconductor Newsletter, or both. You may also request additional information if required, before submitting your application.

Please subscribe me to:


You chose the industry type of "Other"

Please enter the industry that you work in:
Please enter the industry that you work in: