DRAM makers ready to slash production

Concerns over the Taiwanese DRAM market grew with talk of manufacturers slowing production to cope with dropping prices.

Reports emanating from Digitimes show that with spot market prices for 2GB DDR3 dropping below $1.20, manufacturers are hatching a plan to halt price declines.

This means the price has dropped to below the cash cost level of around $1.50.

Slowing production could be one way to do it. Similar tactics were employed at the end of 2008 and the start of 2009 when PC demand suffered. Cutting the production lines is a typical exercise for struggling manufacturers of most goods – control the supply to keep the prices steady.

Sources say manufacturers are stepping up efforts to make the jump to more advanced processes, looking towards 30 nanometres by the end of the year.

Samsung has already moved to the lower power 30nm process.

The news comes as Taiwanese Nanya and Inotera report sales declines. This was also attributed to a DRAM price drop.

Nanya believes that the DRAM industry as a whole will be under pressure for the rest of July, with hopes pinned on a rebound in August.

There has been some noise about the seasonal upturn, and that it will not reap substantial benefits this year.

Taiwanese ProMOS has also been on the rocks, dropping its capital by 85 percent, with an assurance from the government that it would back the company.

This has lead to calls for an alliance amongs Taiwanese DRAM manufacturers, following a lukewarm attempt in 2009, though the calls have been divisive.