DRAM, NAND Flash Memory Revenue Unlikely to Recover in 2009

Revenue from the sale of DRAM and NAND flash is expected to rebound a bit this year, but a full recovery of the worldwide memory chip market is not expected anytime soon, according to an April 23 report from the iSuppli research firm.

In its latest report on the worldwide memory chip market, iSuppli found that revenue from the combined sales of NAND and DRAM memory is expected to increase a modest 3.6 percent in the second quarter of this year. This follows a 14.3 percent decline in global revenue between the fourth quarter of 2008 and the first quarter of 2009.

Revenue from DRAM and NAND sales is expected to increase nearly 22 percent in the third quarter and another 17.5 percent in the fourth quarter, according to iSuppli.

The latest turn of events in the memory chip market could benefit some of the bigger players in the market, especially those in the NAND market such as Samsung, Toshiba and Hynix Semiconductor.

In addition, if Apple ramps up its demand for NAND memory for a new iPhone or iPod designs, the results could also help Samsung, although Apple’s memory chip demand does not help the rest of the industry.

While NAND flash is used in a range of devices from MP3 players to SSDs (solid-state drives), DRAM is primarily used as the basic memory component for PCs.

Although the iSuppli report is a good sign in a tough economy, the study stresses that oversupply in the DRAM and NAND markets will remain, and that means prices for these two types of memory chips will continue to drop.

“While this growth may spur some optimism among memory suppliers, the oversupply situation will continue to be acute,” Nam Hyung Kim, an iSuppli analyst, wrote in a report summary. “For example, shipments of DRAM in the equivalent of the 1Gbit density will exceed demand by an average of 14 percent during the first three quarters of 2009. This will prevent a strong price recovery, which will be required to achieve profitability for most memory suppliers.”

The iSuppli report also found that DRAM vendors will likely cut their capacity again this year, but those production cuts will not be enough to increase revenue significantly until at least 2010.