42
REGIONAL ROUNDUP
China’s DRAM market tries
to shake off Olympic blues
C
hina was hoping for an economic boost
from the summer Olympic games, but
for the nation’s DRAM market, the
event actually had the opposite effect, ploughing a
trough in demand right before the all important
holiday season, according to iSuppli Corp.
With China’s attention focused on the event, third
quarter DRAM shipments in the nation are
expected to post virtually no growth compared to
the second quarter, falling short of expectations.
However, iSuppli believes DRAM demand in the
nation will begin to recover sharply after the
conclusion of the Olympics and the start of the pre
holiday ramp up.
With most of the construction and provisioning of
“The games clashed with the traditional summer national IT facilities having been completed prior
promotional season for PCs in China, with many to the Olympics, most PCs now in use at these
consumers glued to their TVs and absent from operations are at least two to three years old.
stores,” said John Lei, analyst, memory ICs and These systems will need to be replaced or
storage systems for iSuppli. “This caused sales upgraded, particularly with the 60th National Day
momentum to slow. Furthermore, all the IT events to be held in 2009.
equipment required for the Olympics was purchased
years before the event, meaning there was no Furthermore, fast growing Chinese internet service
Olympic boost for DRAM demand.” companies will be upgrading their systems as they
expand their operations in order to attract more
Even before the Olympics, consumer PC demand in customers. Rather than buying completely new
China was already facing some economic equipment, many of these companies are likely to
headwinds due to rising inflation. Beyond this, take a cheaper route and upgrade the DRAM in
China’s government engaged in more strict control many of their systems, iSuppli predicts.
of imports during the Olympics, causing purchasing
activity on the DRAM spot memory market to Regardless of the third quarter, China remains one
decline. of the most vibrant markets for DRAM in the
world. National PC penetration per family is only
With the conclusion of the Olympics and the at about 55 percent, which means computer and
impending start of the holiday season, consumers DRAM demand will continue growing in the future.
should start buying more PCs, driving domestic Much of the growth will be in lower cost white box
demand for DRAM based products. Furthermore, PCs, whose sales growth is expected to outperform
China’s Consumer Price Index (CPI) began to the branded computer segment in the coming
decline in the second quarter and is likely to years. Due to these factors, iSuppli predicts
continue to decrease throughout the second half, China’s DRAM market will avoid a downturn.
reducing inflationary pressures and encouraging
consumers to spend. While demand in China is expected to recover, the
DRAM industry still faces a significant overhang of
“Much of the demand that disappeared during the inventory, which is causing prices to decline. In the
Olympics could return during the holiday season,” spot memory market, pricing for 1Gbit Double
Lei said. “Consumers will be upgrading and Data Rate 2 (DDR2) DRAM dropped by a stunning
replacing their old PCs to meet software 18 percent during the first week of September.
requirements. With DRAM prices at low levels and iSuppli expects a severe price drop for the entire
inflation more tame, consumers may be out buying month of September. Because of this, it’s a great
PCs in force during the holiday season.” time to buy DRAM in China, according to iSuppli.
www.euroasiasemiconductor.com October 2008
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