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EL SEGUNDO, CA – Global DRAM revenue will fall 19.8% year-over-year in 2008 to $25.2 billion, the second down year in a row, following a 7% drop in 2007, says iSuppli Corp.
Unfortunately, this decline won't mark an end to the memory sinkhole just yet. The troubled DRAM market is expected to suffer a revenue decline of 4% in 2009 as a result of global economic uncertainty.
“In the multibillion DRAM industry, many suppliers have engaged in massive spending programs in a bid to increase capacity and take market share from competitors,” said Nam Hyung Kim, director and chief analyst of memory ICs and storage for iSuppli Corp. “Using this strategy, DRAM makers hoped that their competitors would be forced to back out of the spending race and concede market share. However, in 2008, no one won this game of chicken, with players continuing their massive spending drive amid weakening demand, contributing to oversupply, price declines and a massive market downturn that is hurting all suppliers.”
The three-year decline contrasts sharply with market conditions in the mid 2000s, which delivered growth of 52.9% in 2004 and 35.2% in 2006, says the firm.
“The industry, which has been in decline for seven straight quarters, is in a state of emergency with massive layoffs and production cuts,” Kim observed. “The Top-8 DRAM suppliers have lost nearly $8 billion since 2007, and their total operating loss is expected to amount to $11 billion by the end of next year.”
After massive losses in 2001, the overall DRAM business had accumulated profits until 2006. At the same time, DRAM makers increased capital expenditures by more than threefold, rising to $21.1 billion in 2007, up from $7 billion in 2001. Since 2000, the DRAM industry has spent more than $100 billion, which is almost double the level of the Top-8 suppliers' combined market capitalization today, according to iSuppli.
“Three Taiwan-based DRAM suppliers – whose total market capitalization now is around $1.4 billion – have spent a total of more than $20 billion on capital expenditures since 2000, which represents an enormous over-investment during the period,” Kim said. “Furthermore, most capital expenditure money has been raised by issuing debt among many suppliers. The frozen credit market is punishing suppliers that need additional cash not for investment, but for their very survival.”
The industry's DRAM bit production growth rate didn't slow down, even with a 48% capital expenditure reduction this year, showing how much investment already was made,” Kim said. “This indicates an additional capital expenditure cut is inevitable in the near future.”
There are no winners among the DRAM suppliers, says iSuppli. The industry leader, Samsung Electronics, which has spent about $27 billion on DRAM manufacturing investments since 2000, holds the same DRAM market share this year as it did in 2000, at about 30%. The South Korean memory giant in the fourth quarter of 2008 likely lost money in its DRAM business amid oversupply and the global economic slowdown.
Four DRAM suppliers now are seeking government bailout packages: Powerchip, Promos, Nanya and Qimonda.
Hynix is close to finalizing an additional rescue package of $600 million from its creditor, KDB, according to a local Korean newspaper. The double whammy of over-investment and the global credit crunch clearly has impacted the industry badly, and the prices remain below variable costs for DRAM suppliers, says the research firm.
Despite unhealthy economic conditions and an unclear demand picture, iSuppli cautiously predicts the market will turn around in the second half of 2009 because of suppliers' rapid reduction in capacity growth. In the near-term, iSuppli believes prices will stabilize from the current level, and suppliers' losses will be reduced regardless of whether suppliers receive rescue packages from other parties.
“Until that time, the game of chicken has turned into a game of survival – a situation that will persist for months to come,” Kim said.
Unfortunately, this decline won't mark an end to the memory sinkhole just yet. The troubled DRAM market is expected to suffer a revenue decline of 4% in 2009 as a result of global economic uncertainty.
“In the multibillion DRAM industry, many suppliers have engaged in massive spending programs in a bid to increase capacity and take market share from competitors,” said Nam Hyung Kim, director and chief analyst of memory ICs and storage for iSuppli Corp. “Using this strategy, DRAM makers hoped that their competitors would be forced to back out of the spending race and concede market share. However, in 2008, no one won this game of chicken, with players continuing their massive spending drive amid weakening demand, contributing to oversupply, price declines and a massive market downturn that is hurting all suppliers.”
The three-year decline contrasts sharply with market conditions in the mid 2000s, which delivered growth of 52.9% in 2004 and 35.2% in 2006, says the firm.
“The industry, which has been in decline for seven straight quarters, is in a state of emergency with massive layoffs and production cuts,” Kim observed. “The Top-8 DRAM suppliers have lost nearly $8 billion since 2007, and their total operating loss is expected to amount to $11 billion by the end of next year.”
After massive losses in 2001, the overall DRAM business had accumulated profits until 2006. At the same time, DRAM makers increased capital expenditures by more than threefold, rising to $21.1 billion in 2007, up from $7 billion in 2001. Since 2000, the DRAM industry has spent more than $100 billion, which is almost double the level of the Top-8 suppliers' combined market capitalization today, according to iSuppli.
“Three Taiwan-based DRAM suppliers – whose total market capitalization now is around $1.4 billion – have spent a total of more than $20 billion on capital expenditures since 2000, which represents an enormous over-investment during the period,” Kim said. “Furthermore, most capital expenditure money has been raised by issuing debt among many suppliers. The frozen credit market is punishing suppliers that need additional cash not for investment, but for their very survival.”
The industry's DRAM bit production growth rate didn't slow down, even with a 48% capital expenditure reduction this year, showing how much investment already was made,” Kim said. “This indicates an additional capital expenditure cut is inevitable in the near future.”
There are no winners among the DRAM suppliers, says iSuppli. The industry leader, Samsung Electronics, which has spent about $27 billion on DRAM manufacturing investments since 2000, holds the same DRAM market share this year as it did in 2000, at about 30%. The South Korean memory giant in the fourth quarter of 2008 likely lost money in its DRAM business amid oversupply and the global economic slowdown.
Four DRAM suppliers now are seeking government bailout packages: Powerchip, Promos, Nanya and Qimonda.
Hynix is close to finalizing an additional rescue package of $600 million from its creditor, KDB, according to a local Korean newspaper. The double whammy of over-investment and the global credit crunch clearly has impacted the industry badly, and the prices remain below variable costs for DRAM suppliers, says the research firm.
Despite unhealthy economic conditions and an unclear demand picture, iSuppli cautiously predicts the market will turn around in the second half of 2009 because of suppliers' rapid reduction in capacity growth. In the near-term, iSuppli believes prices will stabilize from the current level, and suppliers' losses will be reduced regardless of whether suppliers receive rescue packages from other parties.
“Until that time, the game of chicken has turned into a game of survival – a situation that will persist for months to come,” Kim said.
SEOUL -- Yet another attemped sale of Daewoo Electronics has fallen through, and the tight credit market may discourage other potential buyers from the company, which is valued at around $500 million. The breakdown may mean restructuring for the company.
TOKYO — TDK Corp. will lay off 8,000 workers and close four factories in response to a plunge in revenues.
TDK had 65,500 workers worldwide as of the end September quarter.
MIGDAL HA'EMEK, ISRAEL -- Flextronics' Israel subsidiary has laid off 200 employees here, according to published reports and confirmed by local management.
BANGALORE – Essemtec India has expanded its office here to offer total SMT solutions with full sales and service support.
The branch office service department will act as service hub for the Indian and Southeast Asian markets, according to Jay Kumar, managing director India.
“All service cases will be managed directly by the Indian service team, which is trained by the Swiss headquarters. Essemtec will be able to provide total application solutions plus operator and maintenance trainings,” he said.
The office was founded in 2007 as a liaison site to establish business in the region.
Essemtec India also will open a demo room in Bangalore during the first quarter of 2009. Additionally, the firm will use the facility for customer training and seminars.
The branch office service department will act as service hub for the Indian and Southeast Asian markets, according to Jay Kumar, managing director India.
“All service cases will be managed directly by the Indian service team, which is trained by the Swiss headquarters. Essemtec will be able to provide total application solutions plus operator and maintenance trainings,” he said.
The office was founded in 2007 as a liaison site to establish business in the region.
Essemtec India also will open a demo room in Bangalore during the first quarter of 2009. Additionally, the firm will use the facility for customer training and seminars.
HERNDON, VA – iNEMI sponsored two forums in late 2008, both of which outlined industry action to address current and future environmental challenges and, in response to this input, iNEMI has identified new collaborative efforts.
Proposals for four iNEMI projects emerged from discussions at the Sustainability Summit: noncompetitive lifecycle assessments for information and communication technology products based on a building block approach using assembly emulators; PVC replacement alternatives, using LCAs to compare PVC vs. PVC-free cables and technical evaluation of alternatives; establishing a market for post-consumer plastics as feedstock for green products (e.g., polycarbonate, ABS — acrylonitrile-butadiene-styrene), and establishing electronics applications for post-consumer blended plastics (e.g., housings for power supplies).
Two of these initiates are currently in development, says the consortium. Tom Okrasinski, Alcatel-Lucent, and Todd Myers, Cisco, will champion the Eco-Impact Evaluator for ICT Equipment Initiative (noncompetitive LCAs); and Scott O’Connell, Dell, is championing the PVC alternatives effort.
To become involved in either project, contact Jim Arnold, iNEMI consultant, at jim.arnold@rissastudios.com.
Other areas identified for industry action include working with an IPC standards committee to create a practical industry definition of “halogen-free”; creating an HFR- and PVC-free component and board test specification and metrology, and through traditional volume learning curves, achieving HFR- and PVC-free materials cost, delivery and quality parity.
Proposals for four iNEMI projects emerged from discussions at the Sustainability Summit: noncompetitive lifecycle assessments for information and communication technology products based on a building block approach using assembly emulators; PVC replacement alternatives, using LCAs to compare PVC vs. PVC-free cables and technical evaluation of alternatives; establishing a market for post-consumer plastics as feedstock for green products (e.g., polycarbonate, ABS — acrylonitrile-butadiene-styrene), and establishing electronics applications for post-consumer blended plastics (e.g., housings for power supplies).
Two of these initiates are currently in development, says the consortium. Tom Okrasinski, Alcatel-Lucent, and Todd Myers, Cisco, will champion the Eco-Impact Evaluator for ICT Equipment Initiative (noncompetitive LCAs); and Scott O’Connell, Dell, is championing the PVC alternatives effort.
To become involved in either project, contact Jim Arnold, iNEMI consultant, at jim.arnold@rissastudios.com.
Other areas identified for industry action include working with an IPC standards committee to create a practical industry definition of “halogen-free”; creating an HFR- and PVC-free component and board test specification and metrology, and through traditional volume learning curves, achieving HFR- and PVC-free materials cost, delivery and quality parity.
MINNEAPOLIS -- CyberOptics today lowered its fourth-quarter revenue guidance 24 to 32%, citing the economy and delayed customer acceptance of a large order.
NAMPA, ID -- Plexus Inc. this week laid off 35 full-time employees and 100 part-time workers here, but reiterated its commitment to the Boise area assembly site. The cuts represent about 7% of the company's full-time staffing in Nampa.
KUALA LUMPUR -- Malaysian exports slumped 4.9% year-over-year in November on the market for electronics products fell nearly 11%.
Overall exports were $14.8 billion for the month, beating economists' estimates but still the lowest drop in seven years. Electrical and electronics products make up about 40% ($5.92 billion) of the nation's exports.
Singapore, Japan and the US are the biggest recipients of Malaysian-built products. Exports to the US dropped 17% year-over-year in November, and demand for locally manufactured products from companies such as Dell, Western Digital and Intel slowed. The US was once Malaysia's biggest trading partner but has slipped to third in the past two years.
EAST WINDSOR, CT – Blue Thunder Technologies Inc. reported 26% growth in 2008.
The privately held company, which manufactures wiping products and supplies consumable items used in cleanrooms, assembly lines, laboratories and manufacturing, has had double-digit growth since it was founded in 2001.
The firm says it is hiring and moving to new corporate headquarters that will quadruple its existing facility.
The privately held company, which manufactures wiping products and supplies consumable items used in cleanrooms, assembly lines, laboratories and manufacturing, has had double-digit growth since it was founded in 2001.
The firm says it is hiring and moving to new corporate headquarters that will quadruple its existing facility.
EAST WINDSOR, CT – High-Tech Conversions announced double-digit growth for 2008.
The privately held manufacturer of wiping products and supplier of consumable items used in cleanrooms, assembly lines, laboratories and manufacturing has seen double-digit growth each year since its 1995 founding.
High-Tech Conversions will be moving to a larger modern manufacturing facility in the first quarter of 2009, as well as ramping production in China, Mexico and Germany.
The privately held manufacturer of wiping products and supplier of consumable items used in cleanrooms, assembly lines, laboratories and manufacturing has seen double-digit growth each year since its 1995 founding.
High-Tech Conversions will be moving to a larger modern manufacturing facility in the first quarter of 2009, as well as ramping production in China, Mexico and Germany.
TAIPEI -- OEM/ODM Micro-Star International will refocus its notebook computer line on the hot netbook market and may spin off its Wind brand of low-cost "nettop" PCs.
