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DRAM battlefield
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04/02/2008
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Despite being the best performing dram manufacturer in the last quarter of 2007, Elpida saw sales revenue decline by more than 10%. This was in the context of a sector where sales revenues dropped by 40% in the same time frame.
According to figures released by iSuppli, global dram revenues dropped to $6.5billion in Q4 2007, 19% less than those of Q3. The plunge in revenues resulted in the sector losing nearly $3bn in Q4 alone. In Q4 2006, the dram industry was $3.4bn in the black.
“There’s a lesson to be learned from the fourth quarter dram disaster, said Nam Hyung Kim, iSuppli’s director and chief analyst for memory ics/storage systems. “In this game of upping the production ante, no supplier wins – and the entire industry loses. Tier one dram makers can generate profits more than the industry average when the industry is healthy – and only when supply and demand are in a reasonable state of balance. Rather than pursuing a ‘scorched earth’ policy of ramping up production to gain market share, tier one suppliers should try to return to profitability by rationalising supply growth.”
On an annual basis, dram revenue in 2007 declined to $31.5bn, down from $34bn in 2006. Hynix achieved the strongest sales growth of the top eight suppliers, with its revenue rising by 19%. Meanwhile, Elpida increased its revenue by 8.5%. Every other company in the top eight saw a decline in dram revenue in 2007.
“No matter how you look at it,” Kim concluded, “2007 was a disastrous year for the dram business.”
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Author
Graham Pitcher
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