Sign in with
Sign up | Sign in

Solid DRAM, Flash memory growth in 2006 - report

By - Source: Tom's Hardware | B 0 comment
Tags :



El Segundo (CA) - iSuppli has revised its memory sales forecast for this year - with two rather surprising corrections. While the booming Flash segment will grow at a slower pace than expected, the struggling DRAM market will see its revenues increase, the market research firm predicts. Microsoft’s decision to delay Vista into 2007 did not impact iSuppli’s forecast.

DRAM and NAND Flash represent the two largest segments of the semiconductor memory market and are expected bring in sales of $40.2 billion in 2006, up 12.9% from $35.6 billion in 2005. This represents a substantial improvement over the 7.5% growth that was achieved in 2005.

Flash will be once gain the growth driver for the industry, with unit shipments estimated to increase 187% over 2005 and revenues jump 28% from $10.7 billion to $13.8 billion. According to iSuppli analyst Nam Kim, explosive growth in Flash unit shipments is able to offset pricing declines : "Average Selling Prices (ASPs) for NAND parts declined by about 55 percent in 2005-yet the NAND industry as a whole generated an estimated $3.7 billion in operating profits last year, representing an operating margin of 35 percent for suppliers. That’s a whole lot of profitability," he said.

The first-quarter NAND slowdown had been expected, due to the highly-seasonal nature of demand from the consumer-electronics market. Despite this, the rate of price decreases has been more severe than anticipated, mainly due to developments in the MP3 player market : According to iSuppli, U.S. retailers in mid December held virtually zero inventory of Apple’s popular iPod nano player, due to soaring sales during the holiday season. However, with holiday demand having ended, retailers have built up significant stockpiles of the NAND-based iPod nano. This has caused Apple’s shipments to slow and its demand for NAND Flash to fall short of expectations in the first quarter.

In contrast to Flash, DRAM manufacturers saw price increases in Q1. Kim told TG Daily that quickly dropping prices in the DRAM industry hat reached "inefficient" average selling prices of memory modules by the end of last year, prompting supplier to reduce supply and slow the price erosion. While unit shipments in 2006 are expected to be less than in 2005, Kim expects DRAM revenue to increase by 6.2% from $24.8 billion to $26.4 billion. Consumers will see prices for memory modules dropping significantly slower than in previous years. While a 256 MB module fell by abut 40% in 2005, the decrease is expected to be only 30% in 2006, Kim said.

At least in iSuppli’s forecast, the DRAM industry will not be affected by the late arrival of Windows Vista. The firm said that it had anyway predicted that the operating system would not be available before the end of Q4 and thus would not have much influence on the memory market until 2007. However, Nam Kim conceded that a Vista that would have been released in October - as indicated by industry sources - could have significantly boosted DRAM sales.

Discuss
There are 0 comments.
This thread is closed for comments