Is the latest DRAM bobsled run already coming to an end? Samsung and Hynix say “Maybe”

The semiconductor business has been cyclic ever since it came into existence half a century ago. It seems as though someone at each cycle declares that the business has now learned its lesson and that it will no longer be cyclic. Memory analyst Jim Cantore refuted that meme at the recent MemCon 2010, held in Santa Clara, California. Like all businesses with extremely large capital expenditures, said Cantore, it’s not possible to align the expenditures for new fabs and equipment with the component market ups and downs due to the time lag associated with building and facilitating fabs. The semiconductor memory markets have been on a joyride of late, bringing happy times (and profitability) to DRAM and Flash manufacturers and triggering a new wave of capital expenditures, building capacity for the future. We all know what comes next, even if we hope it won’t. Now, Samsung and Hynix are warning that DRAMs may soon be in oversupply, resulting in falling ASPs.

"If the PC market continues to slow, we may see a kind of oversupply in Q4 or Q1," said Kwon Oh-hyun, head of Samsung's chip business, at a media conference at its annual mobile solutions forum in Taipei.

Hynix has reportedly given the same sort of warning.

However, there’s not much news here, really. We know the DRAM and Flash markets rise and fall cyclically, largely based on PC sales. At the same time, new gadgets such as smartphones and the imminent release of products to compete with the Apple iPad provide new high-volume channels for selling DRAM and NAND Flash memory. With so many overlapping sales cycles, it’s not possible to predict the future with any certainty, other than to say there are certain to be ebbs and flows. But you knew that already, didn’t you?