South Korea – The region's oversupply of memory chips used in PCs is expected to ease up in 2008, as growing demand for portable electronic devices spurs a shift in production to flash chips.
Rising demand for NAND-type flash chips used in portable electronic devices is expected to prompt makers to switch production from dynamic random access memory (DRAM) to NAND, easing DRAM supply, says Chu Woo-Sik, executive vice president in charge of investor relations at Samsung.
To reduce cost, many memory chipmakers will have to close older production lines using 8in wafers. Converting to more profitable lines that produce more chips from bigger wafers takes time and money.
"In the next few months, they will have to make the critical decision to retire those facilities," Chu says.
The DRAM sector, which includes South Korea’s Hynix Semiconductor and Germany's Qimonda, has been experiencing oversupply since the start of 2007. Buoyed by a strong growth period, many chipmakers kept producing DRAM chips despite low demand, causing steep price drops. Some DRAM chips are dealing with price drops of more than 80 percent since the beginning of the 2007.
Note: All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.