DRAM prices to keep plunging

Weakened by a collapse in prices that began over a year ago, the world's dynamic random access memory (DRAM) manufacturers will...

Weakened by a collapse in prices that began over a year ago, the world's dynamic random access memory (DRAM) manufacturers will face even lower sales in 2002, according to market research company Dataquest.

Worldwide sales are expected to be $10.5bn (£7.27bn) this year, a large drop from the $31.5bn estimated for 2000, said Dataquest. Next year the market is expected to shrink further to $8.5bn.

Dataquest predicted that DRAM makers would continue to lose money until the end of next year, and that this situation could lead to the failure of some companies.

South Korea's Hynix Semiconductor (formally Hyundai Electronics), one of the world's largest manufacturers of DRAM chips, is already on the verge of bankruptcy. It has rescheduled debt repayments several times and is currently shedding non-core units in an attempt to stay afloat.

Samsung Electronics ranked number one among DRAM makers in 2000, with a 21.1% market share, said Dataquest. Micron Technology was in second place with an 18.9% share, followed by Hyundai Electronics at 17.2%.

The rest of the top ten were: Infineon Technologies: 8.5%; NEC: 6.7%; Toshiba: 6.2%; Hitachi: 3.9%; Mitsubishi Electric: 3.1%; Mosel Vitelic: 2.8%, and Winbond Electronics: 1.9%.

Dataquest's warning came as spot prices for DRAM chips continued to fall on world markets. In Asia, the spot price for 128Mbit PC133 DRAM chips - a component now becoming standard in many PCs - stood at around $1.00 on 17 October. Three months ago the same chips were trading for around $1.65, while at the beginning of the year their price was $5.40 per chip.

The upside of this situation for consumers is that computer memory is now very cheap and loading a machine up with 256Mbytes of memory costs a fraction of what it did a year ago. The failure of a major memory chip maker would be likely to push prices up because the closure would lead to lower chip production volumes.

Consolidation has already begun in the sector. Earlier this year NEC and Hitachi merged their advanced DRAM operations into a single company, called Elpida Memory.

Japan's leading business newspaper recently reported that Toshiba was in the final stages of discussion with Infineon on the creation of joint ventures for both DRAM and flash memory chips.

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