Profitability will dwindle throughout fourth quarter

DRAM shortages to push prices up

Market conditions for DRAM suppliers may take a dive from September according to market researchers iSuppli. Previously it was predicted that the dive in DRAM profitability would take place later in the fourth quarter, yet now it seems that getting hold of reasonably priced DRAM may be more difficult much sooner than expected.

The tightening market conditions come following a reduction in production of DRAM units, probably due to a combination of Samsung’s power outage last month, meaning production halted temporarily, as well as a general slow down.

The industry as a whole seems to have dropped its production rates after price dives during late July. Supply and demand has now been brought back into balance after DRAM prices increased in the first half of July following the market hitting bottom in late June.

"By reducing their output, DRAM suppliers have helped bring about higher pricing in the third quarter," said Nam Hyung Kim, director and chief analyst for memory ICs/storage systems at iSuppli. "But OEMs and the channel are still working off the inventory oversupply left over from January, which will make it a difficult fourth quarter for memory manufacturers. Furthermore, the shortage of LCD panels is preventing white-box PC makers from purchasing more DRAM. Increasing panel prices also are slowing DRAM content growth in PCs in the third quarter."

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