PC Industry Faces Memory Shortage In H2 2010

Two years of reduced spending by DRAM (Dynamic RAM) chip manufacturers, plus a recovering PC industry, will result in a ‘serious shortage of DRAM chips (the most common type of computer memory) in the second half of 2010.

So warned market analyst company, DRAMexchange, which also said there would be no storage price reductions in the first half of 2010.

DRAM makers expect to increase capital expenditures 80 percent in 2010 over 2009 totals, raising spending to $7.8 billion (£4.8 billion) from $4.3 billion (£2.7 billion).

While this is a promising sign of economic recovery for DRAM makers, DRAMexchange noted that the projected $7.8 billion is still below the 10-year average of $10 billion (£6.2 billion) per year and substantially below the $21.4 billion (£13.3 billion) spent on capital expenditures in 2007.

DRAMexchange said it expects that capital spending will continue to expand to $12 billion (£7.4 billion) in 2011 to 2012.

The expansion of DRAM capital spending, though, will not result in lower prices as expanding demand for personal computers and the reduced capital spending of DRAM makers in recent years will combine to keep demand high, the company said.

According to DRAMexchange, PC shipments will grow 13 percent in 2010. While standard notebook sales will grow only 0.6 percent, netbook sales are expected to hit 22 percent.

“We think DRAM will likely face serious shortage in [the second half of 2010], triggered by the hot PC sales, and PC-OEMs may pull up the inventory level in 2Q09 to handle the shortage for 2H10,” DRAMexchange said. “This situation will result in the warming-up effect for slow season in 2Q10. DRAM price[declines] will likely be eased in 2Q10. That is, DRAM vendors will have great opportunity to remain [profitable] for [the] whole year.”