DRAM a Short-Term Winner, IDC Says

Research consultancy IDC handed out some early holiday cheer to the
makers of dynamic random-access memory (DRAM) chips.

The Framingham, Mass.-based concern issued a forecast for
positive growth in the worldwide DRAM market for the next two years.
However, the report is tempered with a prediction that oversupply due to
expanding production by 12-inch fabs could pull the market down after 2005.

Despite the possibility of a correction, IDC predicts that the DRAM market
will grow from $16.5 billion in revenue in 2003 to $24.7 billion in 2007.

But if DRAMs are to maintain steady growth, it would certainly be the
result of recovering demand and controlled bit supply, according to the
analysts.

“The bit demand from all devices consuming DRAM will increase at more
than 40 percent, will mainly driven by a PC replacement cycle and the
introduction of next-generation microprocessors,” IDC’s report said.

No one segment more clearly demonstrates the cyclical nature of the
global semiconductor market than the DRAM sector. While the
memory chips were once used almost entirely in computers, they are now found
in a broad number of consumer and communication applications. IDC’s report
reflects just such a trend. Analysts with the firm said the mobile devices
sector, such as mobile phones and smart handheld devices (i.e. PDAs), is
expected to experience bit growth that tops other applications.

In terms of memory types, IDC believes DDR will live on through multiple
generations. The report said DDR II will succeed DDR I as the next mainstream memory
interface, and its share of the market will peak at over 70 percent in 2007.
DDR III will then succeed DDR II. XDR, a successor to RDRAM and a potential
competitor to DDR in PC main memory, will begin to emerge in consumer and
networking applications first in 2004.

In terms of memory densities, IDC said as PCs begin to consume more than one
gigabyte of main memory on average in 2007, the DRAM market will
begin to transition from the 512Mbit density to the 1Gbit density near the
end of 2006.

The prediction also falls right inline with estimates from the Semiconductor Industry Association
(SIA)
, which released its annual forecast for 2003-2006 back in
November.

The SIA expects the DRAM market to grow 7.9 percent to $16.5 billion in
2003 and 35.0 percent to $22.2 billion in 2004. The San Jose trade group is
a bit more conservative in prognosticating about the correction. The SIA
points to 2005, not 2006 as the year DRAMs are expected to decrease 20.0
percent to $17.8 billion. The group said in 2006, this market will rebound
30.0 percent to $23.1 billion in sales.

In fact, the overall MOS Memory market (DRAMs, Flash, SRAMs, and EPROMs)
is expected to be the main driving force in 2004. The SIA’s report predicts
the DRAM market, followed by Flash memory , will lead
sales in this product sector. In 2003, the MOS Memory market is forecast to
grow 16.6 percent to $31.5 billion and 32.3 percent to $41.7 billion in
2004. In 2005, this market is expected to incur a cyclical downturn with a
decrease of 10.1 percent to $37.5 billion in sales. By 2006, the loss will
be made up with growth resuming to 18.2 percent to $44.3 billion.

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