Contract Prices of DRAM to Fall 14% in Q2: DRAMeXchange

Market consultancy DRAMeXchange forecasts contract prices of dynamic random access memory (DRAM) to fall 14 percent sequentially in the second quarter, to be steeper than the 11-13 percent drop in the first quarter.

The consultant ascribes the Q2 price contraction mostly to weaker-than-expected replacement of older laptops for newer models running on the Windows 10 operating system and lukewarm demand from mainland Chinese smartphone makers for mobile device DRAM chips.

Originally industry executives predicted the rate of price drop would slow to less than 10 percent. But, DRAMeXchange says the demand is weaker than projected, hence forecasting the prices to continue dropping into May and June after sinking 8 percent in April.

The consultant says that in the first quarter, global DRAM industry generated total revenue of US$12 billion, contracting 7.5 percent from the final quarter of 2014.

Although most of the world's DRAM makers experienced revenue recession in the first quarter, their gross margins remained basically the same as those in the final quarter, thanks to migration to more advanced processing technologies.

DRAMeXchange says Samsung Electronics remains the No.1 DRAM supplier worldwide, which has begun stable production with 20-nanometer process and will likely end the final quarter with 60 percent of its DRAM production on such process.

The No. 2 player SK Hynix Semiconductor, says the consultant, stayed profitable in the first quarter, thanks to migrating to the 25nm process, albeit suffering revenue drop in the quarter.

Micron Technology uses mostly 30nm process to build memory chips, says DRAMeXchange, and the maker's migration to the 20nm process has not progressed as planned to render it more susceptible to price fluctuations.