NAND and DRAM makers are among the hardest hit in the technology sector with the slowing global economy. These manufacturers were already hurting due to an oversupply that had driven prices down across the market at times leading to sales price being more than the cost of production.
The largest DRAM and NAND maker in the U.S., Micron, announced this week that it had posted its eighth consecutive quarterly loss. The memory company posted a net loss of $706 million amounting to 91 cents per diluted share.
Analysts expected a loss, but according to a poll by Bloomberg, the average loss was expected to be in the area of 45 cents per share. Micron posted roughly twice the loss expected by many analysts. Micron pointed out that the loss included a $369 million write-down of memory chip products.
The company reports that sales of its memory products fell 4% from the previous quarter due to significant decreased in market selling prices. Average selling prices for Micron DRAM fell 34% while average prices for its NAND product fell 24%.
Micron CEO Steve Appleton talked about the global oversupply of NAND and DRAM in a conference call according to CNET News saying, "Most of the (memory chip) companies have announced (production cuts) in the neighborhood of 20 percent, 30 percent." Appleton says that how fast the production comes back online will depend on demand in the first half of 2009.
As hard hit as the NAND and DRAM manufacturers are, the builders of equipment that is used to produce NAND and DRAM may be worse off in 2009 than the actual makers of the product. CNET News reports that some of these equipment makers expect to see no business at all in certain sectors in 2009.
It is probably safe to assume that Micron will be forced to make further cutbacks moving into 2009. The company cut 15% of its workforce in October. Oddly, a few days after Micron cut its workforce; it spent $400 million to buy a stake in a DRAM fab.
quote: They make the absolute best DRAM chips out there.
quote: had driven prices down across the market at times leading to sales price being more than the cost of production.