Weak Q1 Performance Signals Bottom for DRAM Market, Says iSuppli

The market leader of the DRAM industry, Samsung Electronics Co Ltd, continues to boost its production even as its competitors pull back amid weak market conditions. But while this strategy may have helped Samsung to avoid the worst effects of weak DRAM market conditions in the first quarter, with the company increasing its share of sales and padding its lead over the competition, it wasn't enough to allow Samsung to generate a profit from DRAM during the period.

Samsung sold US$1.8 billion worth of DRAM in the first quarter, giving it a 30.6% share of global market revenue, up from 30.2% in the fourth quarter, according to a preliminary estimate from iSuppli Corp. While this was 6.2% lower than the US$1.9 billion in the fourth quarter, the overall DRAM market declined by a more precipitous 7.4% during the same period.

Samsung also performed well compared to its nearest competitor, Hynix Semiconductor Inc of Korea, which suffered an 8.4% sequential decline in DRAM revenue. Among the top-10 suppliers, Samsung posted the fourth-best performance in terms of sequential sales growth.

"Samsung recently ratcheted up its already-aggressive DRAM unit growth target for 2008 to 100%, up from the 87% level that iSuppli estimated before," said Nam Hyung Kim, chief analyst at iSuppli.

"Interestingly, Samsung announced its more aggressive unit-growth target immediately after iSuppli on April 24 upgraded its rating of near-term DRAM market conditions for suppliers to 'neutral' -- up from the 'negative' assessment that had been in place since November 2007."

However, the research firm believes that DRAM market conditions now have bottomed out, and there is no further room for declines. "If the market hasn't bottomed out yet, OEM DRAM buyers will encounter major risks of DRAM supply-chain disruptions because some suppliers are facing serious financial issues, and potentially could leave the business. DRAM prices are set to rise slightly during the coming months, although industry conditions still will oscillate widely due to short-term shifts in the supply/demand balance."

According to iSuppli's preliminary estimate, Global DRAM revenue declined to US$5.925 billion in the first quarter, down 7.4% from US$6.4 billion in the fourth quarter.

In the first quarter, no DRAM supplier managed to generate a profit, and losses were larger than expected. However, these enormous losses signaled the bottom for the DRAM market, in iSuppli's view, prompting the company to upgrade its assessment of short-term conditions for suppliers last week.

source:
http://techon.nikkeibp.co.jp /english/NEWS_EN/20080505/151339/