Market researcher Gartner Dataquest said on Thursday the global market for dynamic random access memory (DRAM) chips was likely to shrink an additional 19 percent in 2002 after a massive 67 percent contraction this year. It added the industry was set for consolidation as manufacturers of DRAM chips, used primarily for memory in personal computers, face mounting losses and spot prices less than 10 percent what they were little more than a year ago. "Pricing is already so far below the cost of production all companies are making a loss," Andrew Norwood, senior analyst with Gartner Dataquest's semiconductor group, told a briefing for reporters. "If it falls further it will go below variable costs and we'll see companies going bankrupt. Some sense of reality has to return to the industry." Norwood expected that would happen around the first quarter of next year, especially given the financial weakness of South Korea's Hynix Semiconductor Inc 00660.KS, the world's third-largest DRAM producer.
News source: Reuters