ESNA spoke with ReSolve, part of Arrow's newly launched reverse logistics group, which also includes Intechra, an IT asset disposition services company and Converge, an independent distributor, to discuss the importance of a reverse supply chain logistics program. 
The aftermath of Japan's earthquake last month has left the electronics supply chain struggling with production stoppages and shipment delays of electronic components and raw materials supply.
Because the DRAM market is highly volatile the current buyer's market could quickly swing into a seller's market during the second half of 2011. Buyers will need to keep an eye on several key issues.
Memory to drive IC growth in 2010; mixed pricing trends ahead
PCs and memory ICs will drive semiconductor revenue growth in 2010 with the market on track to reach $304 billion in 2012, according to Gartner Inc. The market researcher says rising DRAM prices, coupled with strong PC demand, will drive a 55 percent growth rate in DRAM revenue this year, making DRAM the fastest-growing device type.
Wireless communications will also contribute to the semiconductor market’s major growth in the first quarter of 2010, totaling $13.1 billion in the first quarter, up 53 percent from $8.6 billion in the first quarter of 2009, according to iSuppli.
However, Gartner says the significant projected growth in revenue this year is much lower when losses of $5.9 billion in the DRAM market last year are factored into the equation. If this “lost revenue” is added into 2009′s $23 billion in sales, then a “fair market value” growth would be about 20 percent, says Gartner.
In general, Gartner expects DRAMs to remain in undersupply in 2010, which will result in firm pricing based on strong demand from the PC market.
At the start of 2011, Gartner expects the DRAM market will move into a slight oversupply scenario because of seasonal demand weakness and increasing supply coming from the move to 40-nm production. The second half of the year is expected to be marked by undersupply.
In 2012, Gartner believes the DRAM market will move into another period of sustained oversupply as new fabs announced in 2010 ramp up capacity, pushing the market into a traditional oversupply-induced downturn with rapidly falling prices.
iSuppli forecasts that global chip revenue in the first quarter will climb 48.5 percent compared to $44.8 billion during the same period in 2009, and reach $279.7 billion in 2010, up 21.5 percent from $230.2 billion in 2009. The market researcher says this marks the first year of double-digit percentage revenue growth for the semiconductor industry since 2006.
iSuppli also predicts that the strongest chip segment in the first quarter of 2010 will be memory, including DRAM and NAND flash, which will experience a 99.3 percent increase in revenue compared to the same period in 2009. DRAM’s strong revenue growth in 2010 is due to the suppliers’ management of manufacturing capacity, which will keep inventories in check and prevent sharply eroding prices.
On the NAND flash memory side, strong sales growth of smart phones is expected to generate high demand for NAND-type flash memory in 2010, thanks in part to Apple Inc.’s iPhone, which will contribute to strained supplies for the year and help to boost pricing, reports iSuppli.
iSuppli expects global NAND flash revenue will reach $18.1 billion in 2010, up 34 percent from $13.5 billion in 2009, according to a preliminary forecast. This compares to a 14.8 percent increase in 2009. iSuppli forecasts that shipments of mobile handsets with embedded NAND flash will grow to 732 million units in 2010, up 13.8 percent from 643 million in 2009. This compares to marginal growth of 1.6 percent in 2008.
NOR revenue in the fourth quarter of 2009 amounted to $1.23 billion, up 0.7 percent from $1.22 billion in the third quarter, according to iSuppli.
Mixed memory pricing trends
Gartner reports mixed contract pricing trends for DDR2 and DDR3 DRAM in February, with DDR3 pricing slowly increasing while DDR2 pricing dropped slightly, as demand shifted to DDR3 parts.
As examples, mainstream 1-Gbit DDR2 declined by 2.1 percent to $2.33, while 1-Gbit DDR3 1,066 MHz increased by 4.3 percent to $2.45. Gartner expects DDR3 pricing will soften in 2010 as Taiwanese DRAM vendors plan to increase their DDR3 output. The market researcher expects that some vendors will increase supply to the spot market, pushing down pricing while putting more pressure on contract prices.
However, average spot pricing for DRAMs across all densities and technologies was up 2.8 percent, compared with the previous week, at $2.61 for 1-Gbit devices, says Gartner.
In the NAND market, contract prices of mainstream multilevel cell (MLC) 8-Gbit and 16-Gbit parts both fell, by 6.4 percent and 5.9 percent, respectively. While NAND demand has been significantly stronger in the first quarter given seasonality — volumes dropped as buyers went on hiatus during the Chinese New Year, Gartner expects that prices will soften during the second quarter.
The NAND spot market remained relatively flat as most buyers waited until after the
Chinese New Year for better clarity on the demand side, says Gartner. Gartner analysts expect some price softness in the coming months, given supply-side constraints, with shortages expected throughout the second half of 2010 as long as economic conditions do not deteriorate.
Contract pricing for high-density NOR flash continued its decline, but low-density NOR flash posted a slight increase in February, according to Gartner analysts, who also note two key recent acquisitions in this market — Microchip’s acquisition of SST and Micron’s buyout of Numonyx.
Numonyx, which became the No.-1 provider of NOR flash memory in the third quarter of 2009, cemented its position in the fourth quarter, reports iSuppli. The company’s NOR flash revenue grew to $434 million, up 7.2 percent from $405 million in the third quarter of 2009. This resulted in a 35.4 percent share of the total NOR flash market, up from 33.3 percent in the third quarter.
Also potentially changing the memory landscape and upsetting the stability of the NOR market is Macronix’s strategy to increase its market share and potentially increase its capacity, while Spansion takes advantage of the unsettled market during the acquisitions, say Gartner analysts.
iSuppli reports that Macronix had an excellent fourth quarter, with $128 million in NOR revenue, up 4.1 percent from $123 million in the third quarter. The company also doubled its market share since 2008 to 10.4 percent of the total NOR flash market, says the market researcher.
Still, Gartner expects that NOR pricing will remain stable in the first half of the year before starting to decline in the second half of 2010, primarily because applications for NOR flash is limited.
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