Merely 2.43pc DRAM supply bit growth in 2009

TAIPEI, TAIWAN: Battered by the DRAM downturn over the past two years, most DRAM makers are facing cash sufficiency problems and may default payment due in the short term.

DRAMeXchange believes some DRAM makers will be forced to maintain low utilization rates of under 50 percent by the end of 2009, resulting in the 2009 DRAM supply bit growth to be only 2.43 percent, compared to 95 percent in 2007 and 66 percent in 2008, says DRAMeXchange.

DRAMeXchange lowers DRAM 2009 supply bit growth estimate from previous 17.82 percent to 2.43 percent. The new update is based on our assumption that some DRAM makers will continue to maintain low utilization rates or even conduct more production cuts due to tight cash levels and low DRAM prices.

DRAMeXchange also lowers DRAM 2009 demand bit growth from previous 19.82 percent to 13.84 percent due to lower PC shipment growth and content per box growth. The 2.43 percent supply bit growth should bring the supply below the demand in 2H09 and help the DRAM DDR2 prices move up to the range of $1.2-$1.5 if the inventory reduction goes well.

According to DRAMeXchange¡¦s survey, February DRAM output dropped to 687 Million (1Gb equiv. ), 21 percent down from the highest level at 867 million (1Gb equiv.) in September 2008.

DRAM output should continue to go down further, as some DRAM makers cut more capacity in Jan.- March¡¦09. This indicates that the DRAM market has reached near a balance and should experience a shortage in 2H 2009.

However, DRAMeXchange also notices that most PC OEMs, module houses and channel distributors have built up over one month inventory. The inventory will be one issue that could hamper the upward momentum when a possible shortage occurs in 2H09.