DRAM to Remain in Short Supply

DRAMexchange analysts say they expect makers of dynamic RAM to increase capital expenditures in 2010, but two years of reduced spending by DRAM chip makers combined with a reviving PC market will result in no storage price reductions in the first half of 2010.

DRAM makers expect to increase capital expenditures 80 percent in 2010 over 2009 totals, raising spending to $7.8 billion from $4.3 billion, according to market analyst company DRAMexchange. Dynamic RAM chips are the most common type of computer memory.
While this is a promising sign of economic recovery for DRAM makers, DRAMexchange noted in a Dec. 24 news release that the projected $7.8 billion is still below the 10-year average of $10 billion per year and substantially below the $21.4 billion spent on capital expenditures in 2007.
DRAMexchange said it expects that capital spending will continue to expand to $12 billion in 2011 to 2012.
The expansion of DRAM capital spending, though, will not result in lower prices as expanding demand for personal computers and the reduced capital spending of DRAM makers in recent years will combine to keep demand high, the company said.
According to DRAMexchange, PC shipments will grow 13 percent in 2010. While standard notebook sales will grow only 0.6 percent, netbook sales are expected to hit 22 percent.
"We think DRAM will likely face serious shortage in [the second half of 2010], triggered by the hot PC sales, and PC-OEMs may pull up the inventory level in 2Q09 to handle the shortage for 2H10," DRAMexchange said. "This situation will result in the warming-up effect for slow season in 2Q10. DRAM price[declines] will likely be eased in 2Q10. That is, DRAM vendors will have great opportunity to remain [profitable] for [the] whole year."