DRAM market hit by inventory surge

Inventory levels for DRAM continue to rise despite the slight fall in inentory in the wider semiconductor market in the third quarter of 2011.

According to market watcher IHS iSuppli, DRAM stockpiles increased dramatically.

The IHS iSuppli DRAM Inventory Index in the third quarter of 2011 stood at 12.8 weeks, as presented in the figure attached. This represents a sharp 31% increase from 9.8 weeks in the second quarter of 2011.

It also is significantly higher than the long-term quarterly average of 9.2 weeks.

“The DRAM Inventory Index measures the inventory value at the end of a quarter against the sales for the quarter. The index accounts for DRAM inventory held by the memory suppliers themselves, and not by DRAM buyers,” said the report. 

“The surge in inventory exacerbates the travails of the steadily deteriorating DRAM market,” said Clifford Leimbach, analyst for memory demand forecasting at IHS.

“DRAM suppliers are suffering from a multitude of market-depressing factors including the lack of worldwide demand, the arrival of new applications needing less
DRAM, and operating systems that do not require an incremental increase in DRAM as previous versions did,” said Leimbach. 

Handheld computing products such as tablets use less DRAM and are also slowing sales growth for traditional notebook PCs.



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