DRAM manufacturers cut production, want higher prices
By James Carbone -- Purchasing, 2/12/2009 2:00:00 AM
In an effort to stabilize prices, memory IC manufacturers have cut back worldwide DRAM production by about 22% since September, according to researcher DRAMeXchange.
In September 2008, DRAM manufacturers produced 1.37 million wafers. By January, they cut production to about 1 million wafers.
DRAMeXchange, based in Taiwan, says the strategy is working as contract prices for DRAM in January stabilized and some DDR2 DRAM prices increased on the spot market. For instance, the spot market price of a 1 Gb DDR2 eTT chip increased from about 59¢ in November 2008 to $1.00 in January.
DRAM prices fell for almost seven consecutive quarters as DRAM manufacturers lost $10 billion in 2007 and 2008, sccording to the researcher.
Suppliers overestimated DRAM demand and upgraded to 12-inch wafers. From the fourth quarter of 2007 to the third quarter of 2008, the number of global 12-inch DRAM fabs grew 56% and 57% of the eight-inch fabs were retired. The result was a 21% increase in DRAM capacity, which caused oversupply and price declines.
When the economy slowed in the second half of 2008, manufacturers started to cut production.
In addition to cutting production, manufactuers have also reduced capital expenditures.
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