DRAMexchange has a note this morning that DRAM prices may soon hit a bottom. It also notes that NAND Flash suppliers are speeding up development of built-in memory products for the emerging mobile communications market. This echoes what Texas Instruments (TXN-NYSE) has said about phones in emerging markets starting to regain some growth. This does look like good news on the forecasting, but it is probably at least worth noting that this is an "industry forecast" and they may always have an interest in looking at more of the good than the bad.
DRAMexchange is saying that in light of the PC selling season in the second half, they expect DRAM demand to increase as PC makers and builders build up inventory. The reports is saying that the second half of 2007 may represent the bottom of "the extremely low DRAM pricing levels. This also notes that the persisting price declines have pushed DRAM makers to the verge of losing money; with more advanced manufacturing processes and increased shipments of 1GB chips as being the two factors that decide DRAM maker performance in the second half.
They admit the current declines in DRAM contract prices were much bigger than originally expected. This has been mainly attributed to the weak seasonality in the PC market, and huge imbalance in the demand and supply chain. They are thinking that DRAM demand may pick up because of low inventory levels. It is counting on a strong seasonality in the PC market in the second half of the year, so it expects a price recovery in what has been a dismal DRAM market. Once again, and it isn’t necessarily challenging the report, just remember that this is based on "improving PC market ahead" and this is an industry report.
You can access the rest of the article here. This will be music to the ears of companies like Micron (MU-NYSE) and Taiwan Semi (TSM-NYSE) if it is true, and both shares are up on the strong Texas Instruments earnings. Altera (ALTR-NASDAQ) is also trading up over 5% after its earnings, while Xilinx (XLNX-NASDAQ) is up less than 3% in early trading. If this "return to growth" in the second half for PC’s is true, that will also be welcomed by the likes of Hewlett-Packard (HPQ-NYSE), Dell (DELL-NASDAQ), Microsoft (MSFT-NASDAQ) and Intel (INTC-NASDAQ).
Jon C. Ogg
April 24, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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