Worst year ever for DRAM industry

The dynamic random access memory (DRAM) industry will experience its worst year ever in 2001, according to Gartner research unit Dataquest.

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By  Matthew Southwell Published  June 25, 2001

The dynamic random access memory (DRAM) industry will experience its worst year ever in 2001, according to Gartner research unit Dataquest. Worldwide revenue is projected to fall from $31.5 billion in 2000 to $14 billion in 2001.

A sudden decline in demand - caused by the slowing growth in personal computer shipments - and increasing inventories are being blamed for the downturn.

"The only thing that can save the DRAM industry from its worst year is if major companies like Samsung, Micron Technologies and Infineon Technologies announce production cut backs," says Andrew Norwood, senior analyst with Gartner Dataquest's worldwide semiconductors group.

Although such a decline would normally signal the demise of key players in other sectors of the IT industry, this will not be the case here.

"In a situation like this, you would expect to see companies exiting the market, but the cost of quitting the DRAM industry is high, and what do you do with the spare fab capacity," says Norwood.

He goes onto predict that 2002 will be a transition year, with low growth returning to the market, whilst 2003 will see the strongest DRAM market growth since the early 1990s.

Although bad news for the industry, the decline of the DRAM market will mean good news for end users. Pricing has fallen by about 80% in the past 12 months. Now an end user adding an extra 128 megabytes of memory to their PC will have to pay less than $20 for a memory module, as opposed to the $120 they would have had to pay last year.

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