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GBI Expert says the integrated circuit industry is caught in a vicious circle of DRAM oversupply.
The report, titled “Memory Integrated Circuits (IC) Market to 2016 – Portable Gadgets Such as Smartphones, Tablet PCs and Ultrabooks to Boost Demand for Mobile DRAM and NAND Flash”, claims that the global economic uncertainty of the last few years, combined with the development of new applications that require less memory, has led to an overabundance of DRAM and a corresponding drop in price.
According to the report, prices have fallen so much that manufacturers have been forced to sell the DRAM devices at below production cost. In an attempt to improve profits, manufacturers have been producing DRAM at 100% factory capacity, exacerbating the market oversupply problem.
Sales revenues for the DRAM market spiked in 2010 at $37.31 billion, but fell somewhat drastically the following year to $29.47 billion, and are only expected to reach $29 billion for 2012.
Conversely, sales volumes have rocketed during this period. 2010 recorded sales of 16.39 billion units while the final figure for 2012 is expected to be as high as 32 billion units.
While the growing portable gadgets market can almost guarantee an increase in DRAM sales for the foreseeable future, analysis carried out by GBI Research indicates that controlling supply and demand is an imperative for the future of DRAM producing companies.