DRAM shortages could drive up prices

 

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By Stewart Mitchell

Posted on 10 Aug 2010 at 12:28

DRAM could be in short supply in the second half of the year, leading to higher prices for chips and the hardware using them, according to research firm iSuppli.

The company blamed the supply woes on a change in production methods, as manufacturers update fabrication plants to enable the latest technology.

"A commodity profoundly susceptible to the variable dynamics of supply and demand, DRAM is expected to ship 15.9 billion 1Gbit-equivalent units in 2010, up 48.6% compared to last year," said Mike Howard, senior analyst for DRAM at iSuppli. "Most of the year's growth is forecast to occur in the second half of the year.

Such high levels of growth, concentrated in a six-month period, will strain the production capabilities of DRAM suppliers

"Such high levels of growth, concentrated in a six-month period, will strain the production capabilities of DRAM suppliers."

Although the market is crying out for more DRAM, manufacturers face a real struggle in meeting demand due to process problems, in particular a shortage of lithography tools used to make semiconductors.

"In the first instance, overall production remains a problem given the inability of ASML, the world's largest supplier of semiconductor lithography tools, to supply enough equipment," said iSuppli. "While ASML appears capable this year of delivering an additional 33 immersion scanners, it will not be enough to resolve the bottleneck."

Immersion scanners are needed to move the manufacturing process down to the sub-50-nanometre processes required to produce the most up-to-date DRAM chips.

Only some of the biggest players have moved to these smaller lithographies and iSuppli says the shortages would be exacerbated if a number of tier-two producers can't move to the newer process.

"In the end," said iSuppli, "the loss in growth might mean an upward movement in prices."