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Monday, March 30, 2009

Turnaround in the the DRAM sector? What might that imply?

As I often do, I was looking through the Digitimes web site to see what was going on in the semiconductor industry. To my surprise, there were a number of articles that imply the DRAM sector is in the process of turning around.

Let's just list the headlines as quoted from Digitimes:
  • Rising chip prices may undermine Taiwan Memory - Taiwan downstream DRAM makers are saying that the leading DRAM vendors, Samsung Electronics, Hynix Semiconductor, Micron Technology and Elpida Memory, are no longer tolerating low chip quotes, and will aim to push chip prices upward soon... Data compiled by DRAMeXchange showed that sport prices for mainstream 1Gb DDR2 chips soared 4% to US$0.88 on March 24 and then hiked over 13% to US$1 on March 26... industry sources have commented that the higher DRAM chip prices are, the lower the chances that the Taiwan government will go ahead with its proposal to establish Taiwan Memory Company.
  • DRAM suppliers may increase quotes due to rising demand, sources say - Samsung Electronics, Hynix Semiconductor and Elpida Memory may raise DRAM quotes as demand from major memory module makers is increasing significantly
  • DRAM spot prices surge on fab shutdown speculation, says inSpectrum
  • PSC chairman says DRAM shortage will occur in 3Q - during a press conference held yesterday (March 25) Frank Huang, chairman of Powerchip Semiconductor Corporation, said that the DRAM chip sector will experience a substantial shortage in the third quarter of 2009 at the earliest, due to suppliers' production cutbacks as well as a warming up of demand
The DRAM sector has been probably the most beaten down area in the semiconductor industry. Suppliers insisted on adding capacity even as prices dropped, causing a glut of product and a decline in margins. Companies like Micron Technology (MU) have gone quarter after quarter without posting a profit. DRAM chips have become simple commodities despite the fact that they are important building blocks for PCs, cell phones, mobile Internet devices and various other consumer and enterprise electronic products.

So if this sector that couldn't seem to do anything right is surging, what does that imply for the overall hardware sector?

If DRAM chips are in demand, someone must be building products to put them in. Is this merely a replenishment of depleted inventory or are we seeing the stirrings of a recovery in the hardware sector?

I've said in the past that tech would be first to recover from this recession. Let's hope this is the real thing and not a head fake. All we can do for now, though, is keep an eye on this and see if these early stirrings lead to something more.

Disclosure: none

1 comment:

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