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Powerchip Technology Corp., a dynamic random access memory (DRAM) chip maker, said Friday the recent fall in DRAM prices should remain moderate rather than plunge to the lows caused by cutthroat competition in recent years.

Powerchip Chairman Frank Huang said price wars in the global DRAM industry have become a thing of the past, contending that producers are able to generate reasonable profits in today's competitive environment.

Huang characterized the recent downward trend in product prices as part of a natural cycle reflecting lower demand from computer makers rather than vicious competition.

The global DRAM industry was hard hit by the global financial meltdown, seeing product prices falling sharply in the first half of 2009.

As the global economy rebounded, DRAM prices staged a significant recovery in the fourth quarter of 2009 and remained at a relatively high level in the first quarter of this year on strong demand.

However, largely affected by the debt problems in Europe, demand for DRAMs slowed in the second quarter, pushing prices back down. But the decline has not been nearly as dramatic as in late 2008 and early 2009, when fears emerged that some local producers might go bankrupt.

Huang said that with the sector migrating to advanced production technology, producers are expected to cut costs and be able to withstand the impact of declining prices.

He also expected the DRAM industry will remain stable over the next two to three years, seeing limited volatility.

Though Huang expressed optimism over the industry's prospects, two of Powerchip's biggest rivals, Nanya Technology Corp. and Inotera Memories, Inc., reported on Wednesday further losses in the second quarter after poor first quarters, citing weakening demand and falling prices.

Nanya Technology posted a net loss of NT$1.02 billion (US$31.7 million) for the quarter, compared with a NT$1.63 billion net loss suffered in the first three months of the year.

Inotera reported a NT$1.81 billion net loss for the second quarter, on top of the NT$1.56 billion net loss in posted in the previous quarter.

The two companies were also affected by reduced production, failing to fully utilize production capacity, as they migrate to a more advanced production process.

Nanya Technology Vice President Pai Pei-lin said he expected DRAM prices will continue to fall, though at a slower pace, in the second half of this year.

Minister of Economic Affairs Shih Yen-shiang said local DRAM companies have emerged from the depths of a global industrial downturn with the help of support from the government.

The stimulus measures initiated to help local DRAM firms, such as providing financial aid for restructuring, helped cushion the impact of the worldwide economic slump.

Shih said the government will continue to lend support to the sector and work with DRAM companies to create prosperity.

By: DocMemory
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