Worldwide demand for DRAM (dynamic random access memory) will increase by 50 per cent to 370 petabits in 2001, down on the 65 per cent jump estimated for the market during 2000, according to a forecast released Monday by Japanese market research company Nikkei Market Access (NMA). (One petabit is equal to 1,000 terabits or 1 million gigabits).
NMA said it expects the first half of the year to be characterized by continued volatility in the DRAM market – volatility that has thrown the market into confusion in the last six months of 2000.
During that period the spot market price of benchmark 64M-bit PC100 SDRAM (synchronous dynamic random access memory) chips has fallen by more than 70 per cent from a July high of around US$9 per chip. Spot market prices in Asia are currently at around $2.60 per chip, according to semiconductor market data provider Independent Commodity Information Services – London Oil Reports (ICIS-LOR), a unit of Reed Elsevier PLC.
The market volatility was due to three main factors, said NMA. Firstly, heavy buying of chips in the run up to the summer in anticipation of a coming shortage helped push up demand and prices in the summer and then, as companies began to use up stockpiled chips, led to lower demand and prices towards the end of the year.
Making matters worse for DRAM makers, a downturn in the PC market led to fewer machines leaving the doors of manufacturers and therefore stockpiles of chips lasted longer than expected. The third factor was that memory in PCs did not increase as much as expected as PC makers fought to keep prices down.
Better news for DRAM manufacturers however came in NMA’s prediction that supply and demand will move back into equilibrium during the second half of 2001. Behind this prediction is an expectation that the amount of memory built into new PCs will increase as use of Intel Corp.’s Pentium 4 processor and the Windows 2000 operating system becomes more widespread.