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DRAM debate: Is boom cycle over?

August 10, 2010 // Mark LaPedus

DRAM debate: Is boom cycle over?

There are mixed signals in the DRAM market right now. Some say the boom cycle is over. Some say that this boom period is just the beginning and product shortages will linger for the foreseeable future.

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Others say the boom cycle will continue, but it will be somewhat limited, due to the lack of fab equipment. As reported, ASML Holding NV and Nikon Corp. are unable to keep up with huge demand for their respective 193-nm immersion lithography scanners for advanced DRAM production.

DRAM makers also failed to invest in new capital in recent cycles. As a result of this and other trends, overall DRAM bit growth projected for 2010 could come in from 2 to 4 percentage points lower than expected. This could reduce the projected annualized DRAM growth rate from 49 percent to as low as 45 percent, warned iSuppli Corp. in a new report.

What's in store for DRAMs now and the future?
Some are pessimistic in the short term. ''In fact, two-thirds of current (fab capacity) plans are centered on memories. The problem is dominantly in DRAMs, where as recently as May, everyone thought the consolidation would limit over-expansion. In less than one quarter, we have gone from a window of endless shortages to excess,'' said G. Dan Hutcheson, CEO of VLSI Research Inc., in a recent report.

Others disagreed. "We believe the DRAM cycle has a ways to go due to the enterprise upgrade cycle (these last few years, not quarters), and DRAM cycles are currently muted (more predictable supply growth and average selling price stability) unlike in the 80s and 90s," said Hans Mosesmann, an analyst with Raymond James & Associates.

"DRAM players are seeing 13-15 percent bit demand growth in 3Q '10 and an expectation of similar quarter/quarter growth in 4Q '10. Some OEMs are indicating 100-plus percent bit growth in 2011, which is obviously not an indication of overall bit demand growth but rather an indication that in enterprise-centric applications (servers) the new Intel Nehalem CPU architecture requires significantly more DRAM," Mosesmann said.
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