The credit crisis really isn't helping most businesses. Judging by an iSuppli research paper, though, DRAM makers could be among the hardest hit. Here's what iSuppli Director and Chief Analyst Nam Hyung Kim had to say on the subject:
Even with the expected intervention by the U.S. government, this crisis means the cost of capital will rise because cash-strapped banks will be reluctant to take on big, risky ventures. This is a particular challenge for the capital-intensive DRAM manufacturing business. DRAM suppliers that already are facing cash issues soon may not be able to service debts that are coming due soon. Furthermore, DRAM suppliers may encounter problems in trying to finance their capital expenditures.
As a result, Kim expects system memory makers to face "serious liquidity issues in the near future." iSuppli says other industry watchers have pointed to Qimonda as one of the companies most at risk, but Kim believes it might actually fare better than its competitors: "Qimonda actually has a relatively good cash balance and a low debt ratio for potential leverage in the future compared to many other DRAM suppliers."
DRAM makers have struggled with other major hurdles recently, too, like oversupply and the ensuing free-fall of memory prices. iSuppli reported a few months ago that global DRAM revenue plummeted 19% in the fourth quarter of last year—"far worse" conditions than it expected. Contract prices for 2GB PC memory modules headed to PC makers may now dip from $30-35 to $20-25 because of a "flood of inventory." The $20-25 range is "less than the variable costs for . . . most DRAM suppliers," this new report explains.
On the upside (for memory makers, at least), iSuppli expects deteriorating economic conditions to curb supply growth, which could send DRAM prices back up. That may breathe life back into the market, although it probably won't help customers.
- Apple: Mac users should run anti-virus software[146]
- AMD's 'Shanghai' 45nm Opterons[109]
- Poll: How will the Phenom II do against the competition?[97]
- Core i7 beats Intel IGP in DirectX 10 software rasterizer[76]
- Vista Service Pack 2 to go gold in April?[69]
- Report: Windows market share dips below 90%[62]
- Do Core i7s have a Phenom-like TLB issue? No, says Intel[55]
- Guitar Hero 5, Call of Duty: Modern Warfare 2 Announced at Massive Event
- Microsoft Launches Games for Windows Live Marketplace with Viva Pinata Demo
- Atari Says Used Game Sales 'Extremely Painful'; Looks to Combat with 'Expandable' Games
- Fable 2 DLC Screenshots: Knothole Island
- Massive Expands with Blizzard, Activision Ad Deals