The worldwide DRam market will follow the PC sector into decline this year, according to two industry analysts.
Reports by IDC and Morgan Stanley Dean Witter have predicted that weak demand will hit the industry hard. IDC claimed that the market will be worth $23.8bn this year, a decline in revenue of 18 per cent compared with 2000. Unit prices will fall by a massive 46 per cent.
"The DRam market suffers from a combination of sluggish demand in the PC industry and a harsh inventory correction in the overall supply chain," said Soo Kyoum Kim, IDC's semiconductor programme manager.
"Inventory carry-over will plague supply and demand conditions until the middle of the third quarter, making it difficult to maintain current price levels," he added.
Kim claimed that a seasonal price recovery could be expected by the end of the third quarter, but that it would not be strong enough to slow the market's decline.
Morgan Stanley Dean Witter found little evidence of an improvement in order trends, but said that smaller size will be the key to reducing DRam manufacturing costs. The firm predicted a global DRam turnover of $18.3bn this year, growing to $27.1bn in 2002.
Although both companies saw no immediate prospect of recovery, industry change could fuel a comeback. "The stage is set for another market restructuring, with the winners and losers being clearly identified over the next year," said Kim.
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