Micron’s Adams Says Computer Memory Prices Probably Bottomed
In December the Boise, Idaho-based company, the only remaining U.S. maker of dynamic random access memory, or DRAM (DRAMXI), reported its second straight quarterly loss as product prices fell amid slowing personal computer orders.
“I don’t think DRAM goes down from here,” Adams said in an interview ahead of a company analyst day in Scottsdale, Arizona. “It’s starting to feel like a stable market.”
Chipmakers are struggling to match supply with demand in the market for memory in personal computers, where plants take years to come online and can’t be shut down cheaply. Underlining that, 2011 industry sales dropped 26 percent to $29.2 billion, according to an estimate by market researcher Gartner Inc. That followed a 72 percent surge in 2010.
This quarter, prices of DRAM chips are still dropping as much as 20 percent, Brian Shirley, head of Micron’s DRAM solutions business, said in a presentation to analysts today. That’s in line with the company’s earlier projection. Demand, rather than too much supply, remains the problem, he said.
“There is certainly some macroeconomic softness out there right now,” Shirley said.
Encouraging signs include cuts in output by competitors and the end of shortages of hard-disk drives, which have held back production of PCs, he said.
Adams was promoted to company president last week following the death of former Chief Executive Officer Steve Appleton in an airplane accident. Former Chief Operating Officer Mark Durcan has reversed his retirement decision and is taking on Appleton’s position.
The industry is inching closer to Appleton’s vision of a more stable business populated by few producers, Adams said.
Only Samsung Electronics Co. (005930), the largest maker of computer memory, which also gets income from mobile phones, flat-panel displays and home electronics, has remained profitable. Suwon, South Korea-based Samsung, the world’s second-largest chipmaker behind Intel Corp. (INTC), spends more on new plants and equipment.
Looking for Opportunities
The latest memory-chip maker to come under pressure is Elpida Memory Inc. (6665), which this month reported its fifth consecutive quarterly loss. The Tokyo-based company said last week it was in talks with the government and creditors to try to reach an arrangement on continued support before an April debt- repayment deadline.
Elpida is the third-largest maker of dynamic random access memory, behind Samsung and Hynix Semiconductor Inc. (000660) Micron is fourth.
Japanese media have reported that Micron was in talks to invest in Elpida. Micron’s Adams declined to comment on whether his company is contemplating any specific transaction, including taking an interest in Elpida.
“We’re going to look at opportunities,” Adams said. The company now has more than $2 billion in cash reserves and in a market with more stable chip prices, Micron may use its balance sheet to lead more consolidation, he said.
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