Stiff cost pressure among global DRAM makers should force some players to trim output by March 2008, according to Simon Chen, chairman at A-Data Technology. The reduced output should signal a rebound for the entire industry, Chen added.
Chen commented that DRAM makers are burning money under the current pricing environment. He emphasized that if only Taiwan makers trim production it would have no meaningful impact over the entire industry given that the two leading Korea-based makers, combined, account for half of global DRAM output.
The present pricing environment is similar to that seen in 2001, Chen said. Prices of SDRAM began to head south with a price rebound only seen after chipmakers started trimming their output, he recalled.
Production cost for a 90nm 512Mb DDR2 chip is currently averaged at US$1.80-2.00 while a 70nm-made chip is about US$1.96, according to estimates by industry players as cited by a Chinese-language Commercial Times report. Spot quotes for 512Mb DDR2-667 chips closed at US$0.99 on November 23.
Despite that industry players are still struggling in the price trough, Chen said cheap DRAM prices mean that the cost of 2GB memory modules is not critical, which in turn should help consume excess DRAM capacity.
Article translated by Esther Lam
