Elpida's Bankruptcy is Great News for Remaining DRAM Players, IHS iSuppli Says
IHS iSupply forecasts DRAM revenue will reach $30.6 billion this year, up 3.3 percent from $29.6 billion in 2011. That's not a ginormous leap in revenue, but still a "welcome development given the stunning 25 percent contraction last year." Point well taken. Even better is the long term outlook, which has the DRAM market exceeding $30 billion in revenue for the next five years and topping $40 billion in 2016. These types of runs just don't happen in the DRAM market.
"This year’s anticipated turnaround comes as somewhat of a surprise, especially as the challenges of 2011 appeared to point to a calamitous 2012," said Mike Howard, senior principal analyst for DRAM & memory research at IHS. "Weak demand was one of the major challenges last year, when revenue slipped each quarter as prices went from bad to worse. However, the key problem was excess DRAM manufacturing capacity—the same trouble that has bedeviled the industry for much of its history."
Last year's floods in Thailand only exacerbated the problem, but according to IHS iSupply, "DRAM prospects started looking better" after Elpida filed for bankruptcy in February of this year.
"Elpida’s insolvency will have a massive impact on the industry’s fortunes, primarily because it promises to shift the market from a state of endemic oversupply to sorely needed balance for most of 2012," Howard said. "As a result of such developments, IHS is now cautiously optimistic that the DRAM industry may actually be through the downturn and headed for improvement."
It's unlikely memory prices will shoot up overnight, but if you trust IHS iSuppli's forecast, it might be a good idea to pull the trigger on any memory upgrades you've been mulling.