March 5, 2001–Mountain View, California–The DRAM market will decline sharply this year, according to market research firm IDC in its ‘Worldwide DRAM Demand and Supply, 2000-2001’ report. IDC predicts that total DRAM revenue will reach $23.8 billion in 2001, a revenue decrease of 18% and severe 46% price erosion compared to 2000 financials.

“The DRAM market suffers from a combination of sluggish demand in the PC industry and a harsh inventory correction in the overall supply chain,” says Soo Kyoum Kim, manager of IDC’s semiconductor program. “Inventory carryover will continue to plague demand and supply conditions until the middle of the third quarter, making it difficult to maintain current pricing levels. Seasonal price recovery is expected by the end of the third quarter, but will not be strong enough to turn the negative momentum of the market.”

The average DRAM content per PC will reach 174MB–a 36% bit growth over 2000–as a result of price elasticity, reports IDC. This will push overall bit demand growth in 2001 to 56% while supply will grow by 52%. Despite the small gap, lingering inventories, limited memory budgets of PC OEMs, and the lack of a new OS to drive more hungry applications on PCs will remain the key inhibitors to demand. The prices of all standard products are approaching or have already reached below production cost, which will make migrating to next-generation processes critical for suppliers to remain competitive. Memory suppliers will also be more tactical this year as they support broader and more profitable interface products such as EDO (extended data out), PC66/100 SDRAM, DDR (double data rate), and Rambus. The mainstream 128Mb market will be the major battleground this year as suppliers shuffle for market share to hedge against price erosion.