Light at the end of D-Ram tunnel?

Is there finally light at the end of the tunnel for embattled D-Ram memory chipmakers?  Research consultancy iSuppli seems to think so, and this week changed its near-term outlook rating for D-Ram suppliers to “positive” for the first time since last September.

In fact, D-Ram’s troubles had begun long before last September, with the market “stuck in a state of oversupply for nearly three years,” according to iSuppli chief analyst Nam Hyung Kim.

Some $15bn in losses later, drastic capacity cuts, bankruptcies, and state-led restructuring has taken supply back down to more reasonable levels. But what is finally helping D-Ram makers turn the table is rising demand for DDR3, a more advanced type of D-Ram chip that has higher performance and uses less power than DDR2, the current industry standard.

A DDR3 shortage has already helped overall D-Ram revenue rise by 37.9 per cent in the second quarter compared with the first, according to iSuppli. Third and fourth quarter revenues are expected to continue to rise by more than 20 per cent on a quarter-to-quarter basis.

“With rising demand and limited supply for DDR3, the global D-Ram industry is set for a sustainable recovery that will extend into the fourth quarter and pave the way for a robust annual increase in 2010,” Mr Kim says.

Underpinning this migration to DDR3 is consumer demand for longer battery life. The second quarter bump could also be partly explained by major PC brands introducing new netbook models. Taiwan’s government research institute, the Market Intelligence & Consulting Institute, says the netbook segment has brought in more than $1.19bn in revenue for Taiwanese manufacturers in the second quarter, the first time it has broken the $1bn mark.

But a D-Ram recovery is not good news for everybody.  Mr Kim notes that “prices are rising in the third quarter, a time when D-Ram buyers typically begin to make purchases for the holiday season … the increase in D-Ram prices will result in lower profitability for the PC makers in the second half of the year.”