Memory chip disaster: New data shows how prices have fallen (chart)
The bad news for memory makers: prices for DRAM (dynamic random access memory) were in a free-fall in Q2 as gut-wrenching as the one flash companies like Sandisk (SNDK) and Intel (INTC) reported in earnings the past two weeks. (Flash prices, however, are clearly rising.)
The good news for PC buyers: Because of the DRAM collapse, those laptops and desktops you'll be ogling later this year, which will run new memory-hungry operating systems from Apple (AAPL) and Microsoft (MSFT), should be a little cheaper thanks to lower component costs.
In the charts below the links, research firm iSuppli documents just how bad the memory supply glut has gotten. (The data was released Friday.) The top five memory producers – including Quimonda (QI) and Micron Technology (MU) – have all announced that they're going to make less memory than they plan to ship in the third quarter – that should firm up prices a bit. Putting the prices in perspective, iSuppli says:
- Global DRAM revenue declined by 24.1 percent, falling to $7.3 billion, down from $9.7 billion in the first quarter.
- Samsung Electronics and Micron, which suffered 16.7 percent and 15.7 percent respective declines in revenue during the quarter, actually significantly outperformed the market and gained share.
- The DRAM per-megabit Average Selling Price (ASP) plunge of 39 percent was actually marginally good news, because it was slightly less than the 40 percent drop iSuppli Corp. had predicted.
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It is quite true that DRAM and NAND are very different in nature. Nevertheless, at least 3 of the top 5 DRAM manufacturers also include NAND in their product portfolio. If they predict, as a lot of us have, the NAND shortage, they will switch some of their manufacturing lines to make NAND. As a result, there will be more supply of NAND and less for DRAM. So it is also quite important keep an eye on those DRAM prices even if your are a NAND true believer. However, if the solid state hard drive catches fire, NAND price will certainly go through the roof. It is simply a demand and supply game.
re:SNDK, it's time to accumulate SNDK, it has potential to rise above $130 and it could go very fast once the race start
This is very confusing. SanDisk reported earnings double expectations after special items. This article makes it seem as if NAND prices are still slumping whereas in fact the NAND market is hot (iPhone, iPod, etc) and shortages will soon appear. As several have mentioned its once again "hammer SanDisk" when it has no right to be hammered. No wonder people think there is a hidden agenda.
Bad reporting.
jf: It doesn't make it seem that way if you actually read it.
HUH? This article is poorly written and completely misleading. How does SNDK in any way relate to DRAM prices? Can you say "apples and oranges?"
What a misleading article using dated information. You must have a short agenda. Nand prices have been rising. You fail to mention that don't you.
I really don't see the point of this article beside a failed attemp at manipluating the market. If you check the commodity pricing of DRAM, it has bottomed out. If you check the pricing on NAND flash, it has increased significantly. Yes, DRAM and NAND got hammered in Q1 2007. But, now the market has been changed and both DRAM and NAND are in tight supply. Even Apple forecast a lower gross margin due to higher component costs from NAND flash and DRAM.
the mention of SNDK is a bit misleading, because their earnings were quite good compared to what was expected. granted, their prior earnings were greatly affected by falling memory prices but even they have talked about a present and future shortage, which will increase prices and earnings. i have noticed that SNDK quite often gets mismentioned in articles they have no business being mentioned in. I think that is why there is a ton of confusion as to what they really do. Your intent may have been to differentiate SNDK Nand from Dram, but this article will make more people think SNDK is also still getting hammered, and it is not, and its future is very bright
jf: Yes, I guess people who see the headline without reading the text will be confused. Thanks for weighing in.
Why mention SNDK in this article? They are not inthe DRAM business. The are in the NAND flash memory business where supply is tightening and prices are rising.
jf: Yes, I noted that in the piece. In the past, some people have confused DRAM and NAND, and I wanted to make it clear that they're different.
Has the DRAM business been lucrative in the last 10 years?? I don't think so. Whenever there is an uptick they all add capacity and go right back where they started. The DRAM market has been so competitve that it would take an exponential rise in demand from a new "killer app" to change the dynamics of the DRAM industry. Unfortunately I don't see a new killer app anytime soon. NAND and NOR flash will likely go the same way as DRAMs as the major DRAM guys tool up for flash. When cell phones plateau then watch the flash guys do the same as DRAM. Now that Intel is dumping it's flash operations to the JV with Micron and the sale to ST there maybe a few winners due to the consolidation due to the multi source strategies employed by PC and cell phone makers.