Memory is back in the news yesterday and today as analysts of all flavors and chip manufacturers alike are jittery, again. Yes, you guessed it, it's that old inventory problem.
But what of all that good news around how low utilization rates kept supply healthier, sudden ASP rises along with big buys just the other week, and news of increased visibility and some ramp ups in production? Oh yeah, right, as financial traders say, ‘even a dead cat will bounce if it falls from a great height.' Granted, this means that I'm offering that there is not a reversal as we'd all hoped, and that I'll join the growing crowd in sticking my neck out and say that inventory issues are still severe and not likely to be overcome in the end (yes, not just the short-run, but in the end!).
Furthermore, and critically for those companies reporting and forecasting for 2H09, iSuppli is warranted in their caution that: "Unless prices increase by more than 200 percent, cash losses will persist for these [DRAM] Taiwanese suppliers. [...] The industry needs a dramatic price recovery of a few hundred percentage points to make any kind of impact."
In case news from analysts alone isn't bad enough, Samsung and Hynix news hit the deck early this morning on their websites. EETimes reports today that Samsung "posted a 72 percent drop in quarterly profit and said it was too early to call a recovery in demand or prices."Well, you might retort, Samsung is a large company and surely their profit problems don't stem from memory chips alone. True, true, but I never like it when the executives say things like Robert Yi, head of Samsung's investor relations, do. According to EETimes, Yi stated that "a sharp recovery in the memory chip or LCD markets was unlikely, [...] the company forecast prices of its mainstay DRAM chips would rise in the low single digits this quarter, but [...] that oversupply would stifle big price rises." This just doesn't sound like it's going to get near the 200 point correction iSuppli and similar analysts say are needed for profitability to return.
Oh, and don't even look to Hynix or other chip manufacturing brethren for better news. No reason to beat the ‘dead cat' on more bad DRAM news, but even Hynix's NAND numbers are down 4% QoQ even with an ASP increase of 10%, as reported in EETimes. Sure, NAND is better off than DRAM, but with demand sparse economies, recovery is still pegged to consumer movement.
So, Samsung's release WAS the good news, after all, since they got the Apple NAND order their numbers could have been worse... TGIF!