iSuppli: Expect DRAM Prices to Climb

Few markets are used to being financially rattled as dramatically as the memory industry, so it may be seen as good news that the analysts at IHS iSuppli have found that DRAM inventory continues to drop. IHS iSuppli estimates that inventory now stands at 11.6 weeks, down 4 percent from 12.1 weeks in the fourth quarter of 2011. Keep in mind that inventory levels steadily rose throughout 2011.

"The latest drop in the Inventory Index is due primarily to an aggressive stockpile burn-off from Japanese supplier Elpida Memory, which declared bankruptcy in February," said Clifford Leimbach, analyst for memory demand forecasting at IHS.

"The action taken by Elpida—and the resulting drop in overall inventory levels for the industry in the first quarter—is a one-time event unlikely to be repeated. Even so, the reduction in stockpiles in early 2012 means that pricing should continue to strengthen in the second half of the year."

Stronger demand, of course, mean that DRAM is likely to get more expensive again. Average pricing for DRAM in the 1 gigabit-equivalent density is estimated to have risen by 1.5 percent in the second quarter, IHS said. the company believes that DRAM will see another 7.7 percent gain in the current third quarter and a 3.5 percent in the fourth quarters. In Q3 and Q4 of 2011, DRAM dropped by 24 percent and 12.4 percent, respectively.