Expect the bankruptcy filing of Elpida to result in higher prices for DRAM in the second half of the year.
With Elpida's plunge into bankruptcy protection, market research firm IHS estimates that prices for memory will increase by about 15.5 percent if more than 25 percent of Elpida's production volume disappears. By the end of 2012, the average DRAM chip could cost $1.21, up from $1.05 in the first half of the year. If the production remains intact, prices are forecast to increase to only $1.13.
“A meaningful reduction in Elpida’s manufacturing will cause the DRAM market to go into a state of undersupply, causing prices to increase,” said Mike Howard, senior principal analyst at IHS. “Shipments likely will decrease because of the Elpida bankruptcy, even though the resulting increase in revenue, driven by higher prices, will cause the market to perform better than expected in 2012."
Howard said that the bankruptcy alone, however, means that "DRAM players can look forward to a much rosier 2012 than they did just one week ago." As a result, the market research firm has increased its DRAM revenue prediction for 2012 from $24 billion to $30 billion.
While the fate of Elpida is uncertain at this time, the analyst noted that the chronically oversaturated DRAM industry may finally reach a state of supply/demand equilibrium.” Such a scenario could provide much more stable pricing for all DRAM makers. In the short term, IHS believes that Micron and Nanya will benefit the most from a possible supply shortage and gain market share as DRAM buyers are looking for supply alternatives. As the two dominant DRAM manufacturers, Hynix and Samsung are likely to already provide DRAMs to most major companies.