Samsung still number one in DRAMs

Severe price erosion resulted in revenue declines for many memory IC manufacturers.

By Jim Carbone -- Purchasing, 2/7/2008 11:43:00 AM

Samsung Electronics remained the top global DRAM supplier in 2007, despite a 9% decline in revenue caused by severe price erosion. 

Samsung DRAM sales fell from $9.5 billion in 2006 to $8.7 billion in 2007 and its revenue decline rate was higher than the industry average of 7% for the year, according to researcher iSuppli. Total DRAM revenue fell from $33.9 billion to $31.5 billion. 

Hynix Semiconductor remained the second largest DRAM maker as its revenue grew 19% to $6.7 billion. The revenue increase coupled with the revenue declines of most other DRAM manufacturers resulted in Hynix growing its global DRAM market share from 16.6% in 2006 to 21.3% in 2007. 

Qimonda held onto third place in the DRAM rankings despite a 25% decline in revenue from 2006. Its 2007 revenue was about $4 billion. 

The revenue declines were caused by too much capacity, which resulted in severe oversupply, high inventory levels and falling prices through much of the year. 

The drop in revenue by most DRAM manufacturers resulted in an industry-wide operating loss of nearly $3 billion in the fourth quarter. This represents a $6.4 billion swing in operating profitability compared to one year earlier, when the DRAM industry was in the black to the tune of $3.4 billion, says iSuppli. 

“There’s a lesson to be learned from the DRAM disaster,” says Nam Hyung Kim, director and chief analyst, memory ICs/storage systems for iSuppli. In this game of upping the production ante, no supplier wins—and the entire industry loses.” 

He adds that DRAM suppliers have to stop “ramping up production to gain market share, and try to return to profitability by rationalizing supply growth.” 

Some DRAM suppliers are following that advice and have cut back on their capital spending for 2008. However, overcapacity and high inventory levels will likely continue through the second quarter so buyers can expect prices to continue to fall. 

Also see, DRAM prices fell 31% in fourth quarter