DRAM revenue falls 20%
DRAM suppliers cut their own throats in 2008 by overproducing, causing a glut of parts and declining prices
By Jim Carbone -- Purchasing, 1/15/2009 6:02:00 PM
Global DRAM industry declined nearly 20% in 2008 and memory IC suppliers only have themselves to blame.
Total revenue fell 19.8% to $25.2 billion from $31.5 billion in 2007, according to researcher iSuppli in El Segundo, Calif. Revenue fell because of excess capacity which led to steep price declines.
“Many suppliers engaged in massive spending programs in a bid to increase capacity and take market share from competitors,” says Nam Hyung Kim, director and chief analyst of memory ICs and storage for iSuppli Corp. “DRAM makers hoped that their competitors would be forced to back out of the spending race and concede market share.”
The problem was no one backed down and suppliers continued their massive spending drive despite weakening demand. Prices fell through the floor.
There were no winners in 2008 in the DRAM industry. Industry leader, Samsung Electronics, which has spent about $27 billion on DRAM manufacturing investments since 2000, holds the same DRAM market share this year as it did in 2000, at about 30%. Samsung likely lost money in 2008 in its DRAM business.
Four DRAM suppliers, Powerchip, Promos, Nanya, and Qimonda, did so poorly they are now are seeking bail-out packages form their governments.
The bad news for suppliers is the revenue decline isn’t over with yet. DRAM revenue will drop another 4% in 2009 due to economic downturn. iSuppli predicts that the market will turn around in the second half of 2009 due to suppliers' rapid reduction in capacity growth.
Also see DRAM makers cut production 22% in fourth quarter
Now Playing:
DRAM prices plunge in first quarter
06/17/2009Intel grows processor market share
04/01/2009Samsung still number one in DRAMs
02/07/2008AMD gains microprocessor market share
06/10/2009DRAM prices fell 31% in Q4
02/06/2008
