MANHASSET, N.Y. — The current surplus of NAND flash memory is expected to negatively impact prices of dynamic random access memory (DRAM) devices in the near future, according to market research firm iSuppli Corp.
That news could be sobering to memory suppliers that have been reallocating production to adjust to earlier market conditions and projections. iSuppli (El Segundo, Calif.) expects the NAND market weakness to spread into worsening DRAM market conditions, creating a zero-sum game particularly for suppliers of both types of memory.
The DRAM market has been recovering since January, said iSuppli, with suppliers successfully raising OEM contract prices.
Two of the largest DRAM suppliers, South Korean companies Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc. recently hiked DRAM prices, according to a Bloomberg report.
The recent DRAM price hikes have came after memory companies saw DRAM revenue decline 5 percent in 2005, according to market research firm Gartner Dataquest.
But iSuppli analyst Nam Hyung Kim believes that the DRAM recovery could be short-lived.
In a recent report, Kim asserted the DRAM market is overheating, with too many speculators and buyers overly concerned about recent developments in pricing for Double Data Rate 2 (DDR2) SDRAM. This has caused OEM prices to rise during what is normally a weak period for pricing and sales.
Kim said the situation was being exacerbated by Samsung and Hynix converting production lines from NAND to DRAM, while two other suppliers, Infineon Technologies AG and Elpida Memory Inc., announced plans to increase DRAM shipments.
The memory suppliers’ actions are not surprising, considering the recent licking they’ve taken in NAND Flash.
DRAMeXchange recently noted a fall in spot prices of 2 to 8-gigabit NAND Flash parts. And, memory suppliers have seen their stock prices dip amidst worries of softening NAND demand, investment analysts were quoted as saying in a Reuters report.
iSuppli noted that slower seasonal demand, combined with overbooking and inventory adjustments, has caused the NAND flash memory market to enter a temporary lull. In the first quarter, sales have slowed for key consumer-electronics products that incorporate NAND flash, such as Apple Computer Inc.’s iPod music player, the firm said.