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DRAM manufacturers are holding back the product – a new collapse in prices is possible?
Disappointing first quarter results push DRAM makers to try to recover prices for their products. To this end, they have taken a low-key stance in the spot market, hoping to drive up prices by temporarily restricting supplies. However, industry observers are unsure of the effectiveness of such a strategy.
DRAM spot prices hit another low last week as DRAM makers tried to improve Q1 performance by ditching inventory. Since the warehouses were vacated, DRAM suppliers, primarily the two largest South Korean manufacturers, began to hold onto the goods, artificially creating a temporary balance in the market. Some market participants note that they are wary of such actions, as they could end up with even greater losses in the second quarter if supplies again exceed demand.
Industry officials are skeptical of supply control efforts, saying DRAM makers are trying to manipulate the market by creating the illusion of shrinking supply. If demand does not pick up by the middle of the second quarter, DRAM makers will again be forced to dump their inventory on the market, triggering a wave of panic deals.