DRAM Demand Expected To Improve Over The Next Six Months

Digitimes in one of its articles today, anticipated improvement in demand for major DRAM module makers, during the second half of fiscal ’08. Excerpt:

Major DRAM module makers A-Data Technology and Transcend Information explained that its more than 30% on-year sales decline was due to weakening demand and a rapid price drop of NAND flash. The company reiterated a warm outlook, but noted that whether global demand will be affected by a sluggish consumption atmosphere in the US is still subject to further observation. As of June, A-Data recorded a June sales breakdown between DRAM and NAND flash at 57% and 43%.
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Transcend, though also posting a sequential sales decline in June, was cited by a Chinese-language Commercial Times in saying that it is confident that second-quarter gross margins should increase to double digits again. Thanks to consistent market share growth, the company reported more sales from NAND flash last month. Its sales breakdown between DRAM and NAND flash in June was 39% and 53%.
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Transcend also expects memory demand to recover along with seasonality. More demand is expected to stem from the 3G iPhone from Apple, smartphones and low-cost PCs, the Commercial Times quoted company as saying.

What makes this piece more interesting, is that the overall consensus for the DRAM market, according to chinadram is that it still remains in a downturn. Last month, Avi Cohen, head of research at Avian Securities, in a research note said –

”Over the past month or so, we have highlighted our expectations that memory pricing will remain under pressure”.

Also, there have been reports about spot prices falling on a flood of defective DRAM parts in the marketplace, said to be made by Samsung Electronics Co. Ltd.

Cohen said. ”While it can be argued this is a result of fear that Samsung will dump those ‘bad’ parts into spot resulting in lowered confidence in spot quality and a further shift to the contract market, the fact that contact pricing only lifted about 5 percent over the last 6 weeks doesn’t impress upon us the severity of the tightness.

However, Daniel Amir, an analyst with Lazard Capital Markets holds an opposing view, saying that while the spot markets will continue to be in flux, the contract tags are going up.

”Second half June DRAM contract pricing should be up 5 percent”, Amir said. “Customer inventory remains in line with expectations as the PC DRAM orders are balanced. Also, Samsung has taken the approach of stabilizing DRAM pricing though still keeping it at close to cost level in order for its competitors to suffer, he concluded.”

It will be interesting to see how it all plays out for DRAM module makers in the remainder of fiscal ’08.

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