The DRAM industry has entered its profitable years following unprofitable 2007-2009. The research firm in its recent research report pointed out a combination of positive factors including economic improvements, replacement demand for Windows 7, cautious outlook for chip suppliers' capex and supply constraints.
Most DRAM makers reported operating profits for the years between 2004 and 2006 after posting losses in 2001-2003. They slipped into the red in 2007 through 2009, when their previously-invested capacity came on line to cause a supply glut.
Predicts another three-year cycle of profitability is about to take place, attributing to a sharp rise in demand. On the supply side, the DRAM makers were reluctant to invest in capacity while having been unprofitable, resulting in limited capacity at present, the firm said.
New capacity will be limited in the next two years as most DRAM companies remain cautious about expenditure on expanding production.
Samsung Electronics, Micron Technology and Powerchip Semiconductor Corporation (PSC) were quoted in recent reports urging their peers to avoid aggressive capacity expansions, as the race to increase capacity would lead to oversupply and price erosion. Currently, only Nanya Technology among the players has revealed plans to ramp up wafer starts at its 12-inch fab by 67% to 50,000 units by the end of 2010.
In addition, Now expects combined capex at DRAM chipmakers will reach US$8.361 billion in 2010, up over 90% from NT$4.336 billion in 2009. Despite the huge jump, the capex estimate represents a 32% drop from US$12.246 billion in 2008, and far below the 2007 level of NT$21.44 billion.