by 
DRAM always provides us with something to talk about, and as we head into the second half of 2012, there's been quite a bit of speculation lately surrounding the memory market's next price points.
After a relatively serene first half of the year during which DRAM average selling prices (ASP) managed a relatively small yet steady 20 percent overall increase, volatility returned. Since early July, computing DRAM prices decreased approximately 10 percent, dragging consumer DRAM prices down too and leaving little doubt the trend will continue for the short term. The question to be answered is when will it end and where will pricing be when it's time to buy memory for Christmas and year-end builds?
My current answer is: about right here, right where July's market currently stands. Many say the current, sudden ASP downtrend was caused by {complink 1769|Elpida Memory Inc.}, who began aggressive PC DRAM sales to quickly bring in cash. Competitors followed suit, just to sell something. That, however, might have simply been the last gram of saltpeter tipping the scale in the wrong direction — sooner than expected, but not unexpected.
For the last year plus, DRAM manufacturers attempted to keep ASPs up (some think artificially so). While production capacities grew due to smaller wafers and new fabs, manufacturers did not loosen the reins of that full global capacity. When PC DRAM demand grew less than expected, they moved capacity to other, less volatile and higher margin niche products. With the excess inventory manufacturers accumulated, they competed in the enterprise/server market, fighting for shares in the clouds of data storage. Finally, some DRAM makers simply refused to lower ASPs below profit-making levels.
But a flood that kept PC makers from attaining first half 2012 sales projections, a worsening global economy, and more wafer shrinkage, meant mounting inventory. Though ASPs increased, it was a matter of time before DRAM makers let off some pressure and sold some of that excess inventory. When inventory levels become acceptable again, off-selling will stop and prices will bounce back. That should come soon, before the end of the third quarter, when consumer electronic and PC manufacturers need to buy for Christmas production.
So, now we're wondering how high ASPs will bounce back. Will the introduction of Windows 8, increased tablet sales, or those Christmas requirements return us to pre-July watermarks?
I'm reserved about the answers I hear in the marketplace: “Strong DRAM Sales in the second half,” “inventory indexes strengthening,” and “With Elpida gone, others should benefit.”
{complink 2657|Intel Corp.} has already announced they anticipate their PC market sales to be lower in the second half, with hope of tablet demand offsetting some loss — despite the introduction of Windows 8 to lure buyers back to stores. Inventory indices remain higher now than in the first quarter of 2011. While they may trend lower over the next few quarters, they will remain at precarious levels.
Meanwhile, much of Elpida's lost capacity will be filled by Micron's increased capacity, if that prospective merger bears fruit. And the global economy has a ways to go before a mass of consumers from any country earn enough disposable income to generate increased PC sales above current projections.
The good news is DRAM manufacturers have a better handle on inventory management now than ever before. Tablet wars, cloud servers, and increasingly complex consumer electronics eat away at the elephant capacity of PC DRAM and will help the memory market overall balance average pricing to acceptable levels for manufacturers.
Now, if Taiwan DRAM makers — those connected to Elpida and those who are not — rupture at all, that'll require an update. Until then, I would expect ASPs to bottom out in the next month, followed by another slow but steady climb through the middle of the fourth quarter. Prices won't top the end of the second quarter but will be close to it. So, “strong” DRAM prices may be too strong a phrase for what lies ahead.
The company that tried to set up a commodities market for DRAM? Enron! I reported on Enron's efforts to set up the exchange and later its demise. DRAM didn't die but you are sure right about the direction of pricing in the market. Down.
“DRAM Pricing: Down Now, up Tomorrow?”
Todd, any supporting evidence for this statement. Is there any decline in production or shortage of DRAM in market? In such cases obviously the price can shoot up.
Moore's Law to a “T”!!!!
Firstly, I think the whole litigation process have gone potty. The courts are now challenged to keep up with these cases… In addition, generally 'patent wars' have gone bizarre. It's sometimes unnecessary. . As silly as it may sound, the judge was right to have clearly and distinctingly emphasise the uniqueness of each products in his judgement when he asserted that Apple's device is” cool”. To my mind, it clearly says why ever brought this case to court? Apple and Samsung (though both business rivals) are in a unique position in the electronic technology market and even their fan base and customers are well aware of this. So both companies need to find a way to resolve this unnecessary wasting of valuable time, money and energy and focus on something else. Secondly, I blame the judicial system. It has long encouraged and tolerated unwarranted litigation claims (common sense solution is farfetched). It's high time the systems take a hard look and review the damage it's created (now that the courts are struggling to cope with the process it's created). It's no use ditching out school children's punishment afterall these cases don't come cheap!!
Anna: love your analysis, but I particularly love the word 'potty' 🙂 But you are right–these things don't come cheap and often boggle the mind. There is supposed to be some kind of filter for what cases actually make it to court, yet there are examples everywhere of what can only be called frivilous litigation.
@Anna, I second Barbar's opening sentence. The litigation we have today makes the extended court case satirized in Dickens Bleak House look tame.
Hi, Ariella
Good reference to Dickens. Indeed, this case brings several thoughts of England in the 1800s.
-Susan
@Susan Yes, we've made a lot of technological progress, but we still need to work on human progress.
Barbara,
Yes, there should be some sort of rational thinking when it comes to what cases should make it to court. Now, with all the money and publicity around these cases, it's easy to see why they make it to court, isn't it?
-Susan
Ariella,
Indeed, but what makes human progress go forward? Technology is one answer, but learning from past mistakes, evolving in intelligent reasoning, and solving problems in a civilized and adult manner can help to achieve that progress, too. I don't see this happening at the moment.
-Susan
Hi, Anna
“Secondly, I blame the judicial system. It has long encouraged and tolerated unwarranted litigation claims (common sense solution is farfetched). It's high time the systems take a hard look and review the damage it's created (now that the courts are struggling to cope with the process it's created). It's no use ditching out school children's punishment afterall these cases don't come cheap!!”
Exactly! This case is about hardware design. Let's simplify and let's say just design.
It's pretty obvious that at some point the tablets would become similar. In the same way the different car makes are similar, collections of defferent fashion designers are similar, jewellery design, shoe design, you name it. I can think of many examples in design where I have noticed similarities in products of different designers. However, I haven't heard any of them suing another designer. Why manufacturers have to be different?
The judicial system shouldn't allow these cases to go forward by not accepting them anymore, when obviously they judges have no solution for them other than children's punishment, which goes beyond the line of ridiculous.
-Susan
Susan, I think through this court verdict Samsung is going to get a free advertisement through Apple website. I don't know why these two giants are fighting through court for silly things. Let them compete each other with technology and if they feel something great they can also patent the technology, design etc.
Hi, Jacob
The tablet market has, by far, been a strong market. After the launch of the iPad by Apple in April 2010 the truth is all manufacturers are trying to produce similar devices, which is fine. All the other markets do the same. Unless someone designs a round tablet all the tablets will have something similar.
There is not too much science into tablet design, is it? The fight is silly. So silly that got a silly punishment. The whole case is silly, Jacob. The case should be dismissed, as if it would have never existed.
-Susan
To me Judge looks eccentric. New trial should be conducted and Samsung should be punished blatant copy.
Hi, _hm
Well, Apple is appealing in October, so the story will continue.
Why eccentric?
-Susan
Jacob, I do not see any shortage within the DRAM market; I say “up” a tad because of normal 2nd half buying patterns over the last few years. Gotta sell those PCs at Christmas.
re : Bolaji:
You remember that? Most don't. Being in the same town with us, they visited and spoke with us several times. I never understood how they figured it could work, as memory isn't really a theoretical market. But if a company can commodify weather, they thought they could force it into existence…. Followed by buckaroo.com and a few others.
@Susan, just like bickering children.
Susan, only half portion of the cartoon is displaying. The second half RHS is not displaying properly. Any way it’s a thread for comedians and cartoonists. Let them enjoy and make others enjoyable.
Susan, we know that the fight is for silly reason and nothing worth for that. My doubt is why these corporate giants have not even common sense like ordinary peoples to think about it. They are simply wasting their time, resources and capital for that.
Hi, Jacob
It seems it's too big. Here is the link to the cartoon. The best part didn't show the first time. 😀
-Susan
Ariella,
Here is the link to the cartoon. Half of it didn't show the first time.
-Susan
Jacob,
Maybe next time either Apple or Samsung want to keep their designs secret they seal them and put them in a safe instead of patenting. That's what you do when you don't want anyone to know you secrets, right?
-Susan
Thanks, Susan.
Humor even a non-tecchie can love
Susan,I think they can legally register the design, features, functionalities etc on their own name like registering the patents. So it's get a legal protection and if anybody is copying, they are entitled for royalty or share. Instead of that why such long court proceedings.
Susan, thanks for the link. In your response, the best part about BlackBerry was missing.
Jacob,
Yes, the best part didn't show the first time. Glad you like it. 🙂
-Susan