The unstable DRam market could be in for its biggest ever shake-up as South Korea looks set to lose its dominance in the coming years.
Despite firms such as Samsung and Hynix controlling 45 per cent of global DRam revenues in 2006, market watcher iSuppli believes South Korea will lose its unit production lead to foreign rivals within three years. Although Taiwanese/Chinese DRam makers only account for 17 per cent of global revenues, the picture is different on the unit production side.
For this year, South Korean companies will account for 47 per cent of unit production, but Taiwanese/Chinese rivals will account for 31 per cent, with the other 22 per cent coming from ‘other’ regions. The gap will shrink in 2008, with the South Korean share shrinking to 46 per cent while the Taiwanese/Chinese share will rise to 35 per cent.
Derek Lidow, president and chief executive of iSuppli, said: “South Korean companies are adding DRam manufacturing capacity, but this is contributing significantly to the collapse in pricing for the memory this year. These price declines will cause South Korean manufacturers to reduce DRam output growth next year. Meanwhile, Taiwanese/Chinese suppliers will increase their output, and may surpass the South Korean manufacturers in DRam manufacturing capacity by 2010.
“The DRam market has grown because of added manufacturing capacity, but this has required DRam suppliers to drastically cut prices in order to sell their output. Prices now are below cash production costs for many suppliers. Annual DRam revenue growth peaked in March and is in the midst of a deceleration that will continue until March 2008.”
The news comes as Samsung insiders claim the company is facing another weak quarter of DRam sales. The company is due to announce its second quarter financial results, which will reflect the DRam price collapse of recent months.
A Samsung representative said: “It’s true that we’re worried about the sharp declines in DRam chip prices and although we’re not expecting a loss for the second quarter, the profit will be at a level similar to the first quarter.”
Although prices in the DRam market continue to tumble, it is expected that
many memory makers will off-
set some of the losses with increased Nand Flash production.
“The South Korean DRam suppliers will shift capacity away from DRam and toward Nand, which is expected to be more profitable over time,” Lidow said.
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