November 1999 Industry Update

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DRAM Update

Spot prices have come down significantly from their highs in late September due to weak demand in late October, however they are still above $10, almost three times what they were at their lowest point in May of this year. Recent reports indicate that demand is again increasing, so prices will likely begin to rise very soon.

One important consideration is that the work-in-progress that was affected by the Sept 20 earthquake in Taiwan would have been due to be completed this month. This includes chipsets as well as DRAM. This means that we are likely to see another sudden increase in prices for a few weeks until supply once again starts satisfying the demand, making for a possibly very difficult Christmas season for manufacturers.

As i820 boards begin to enter the market, expect that DRDRAM shipments will resume from the major manufacturers (primarily Hyundai-LGS, NEC and Samsung). It is expected that the demand for these modules will be lower than expected, since users will be forced to choose between either SDRAM or Rambus support. Cost and availability (as well as performance) will likely convince the majority of users and manufacturers alike that SDRAM is the way to go right now. Manufacturers who invested a lot of capital into Rambus production cannot be pleased.

Other

Because of increased demand during the past few weeks (after a slowdown during late September and early October), it appears that there are chip shortages, both for key controller chips and memory, as well as more commodity SRAMs, TTL, etc.

In the storage arena, it seems that an expected price war for Q4 may not materialize as seasonal demand remains high enough to consume all product produced. Currently 4.3, 6.4, and 8.4GB remain very scarce as the unexpected strong demand continues to outstrip supply. Storage guys have moved from these low-margin and sometimes money-losing capacities but can’t get their customers to do the same.

In the long run, a shake-out of sorts is still expected, and most feel that the end is near for Western Digital. Many feel Maxtor will survive as a niche player, primarily on the basis of its good technology. The current feeling is that there is probably one player too many with IBM continuing to be a force.

Until Next Time…

The information given in these articles comes from many sources – manufacturers, analysts, news reports and, of course, reader feedback. We encourage our readers to provide information and critiques for this and future updates so we can continue to provide useful and interesting information for the hardware community. We are also interested in hearing about any errors or misinformation. If you have reliable information, or see information published elsewhere that might be useful, please let us know by emailing info@realworldtech.com.

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