Bolaji - interesting point and you're probably right, I think. It will be interesting, though, to see whether the current struggling companies (in Taiwan) will remain, or whether there will be new entrants who recognize and can take advantage of some of these changes in the DRAM market. Can anyone name a "new" DRAM vendor?
Bolaji: That is certainly true. More often than not the swing was toward lower prices. But didn't that usually lead to hoarding? Then the hoarding led to shortages, which led to manufacturing ramp up, which led to oversupply, lower prices, and more hoarding...? If prices eroded downward during each of these cycles, I guess it makes sense.
I'll answer your question. No. Memory makers won't be successful at defending market share and keeping others out. This is a competitive market and when it succeeds in tamping down on supply and pushing up pricing, the small players also experience a boom and the cycle starts all over again.
Tam, I would like to share your optimism that instability may be coming to an end in the DRAM market but the market's history stops me from going that far. Vendors would like to have fewer competitors and you are right that the market may be consolidating around three companies but the bit players won't go away. They won't because OEMs won't let them.
OEMs don't like having fewer choice of suppliers. As the market bounces back (as a result of the consolidation) and prices firm, more suppliers will dive in and OEMs will encourage them to drive down prices. That cycle will inevitably return.
Barbara, OEMs haven't always complained about the instability of the DRAM market. They've arguably benefitted more than suppliers from the volatilityof the market because pricing has been largely favorable for them while shipment hasn't suffered. In fact, through the ups and downs, unit shipment of DRAMs have increased as consumption has always been on the rise.
Having fewer suppliers isn't something OEMs like and somehow they'll entice the smaller players into staying in the game.
It is interesting that you reckon there will only be 3 suppliers soon and that the mobile demand is outstripping PC. I also welcome anything that can stabilize the DRAM market (except more expensive parts of course).
Looking at the overall market, it is a centain trend of mobile DRAM market increasingly accounting for more shares of the whole DRAM market due to the rapid development of smartphone and Tablet PC, but with more manufacturers participate into the mobile DRAM market, overcapacity may also occurs, just like the distribution industry. The key is whether the several major mobile DRAM manufacturers can maintain their market shares and the market situation.
This sounds like a pretty good argument for stability. While it is always fun on the outside to look at the wild swings of DRAM market, it can't be fun for buyers and manufacturers. A stable anything in this marekt is a welcome break form volatility.
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