Qimonda number two in global DRAM market

The German memory maker, which was recently carved out from Infineon Technologies AG, increased its DRAM revenue by 29 percent in the third quarter compared to the second. Its sales rose to $1.55 billion, up from $1.21 billion in the second quarter. Qimonda expanded its market share to 16.9 percent, up from 16.2 percent in the second quarter. Qimonda's DRAM bit shipments rose by an impressive 17 percent sequentially in the third quarter, beating iSuppli's forecast of 10 percent. The company also managed to increase its DRAM Average Selling Price (ASP) by 10 percent sequentially due to its dramatic rise in shipments of higher-priced graphics DRAM. Qimonda's growth exceeded the industry average of 23 percent, which represented a surprisingly strong expansion for the DRAM market. The company's growth was also the highest among the Top 5 suppliers of DRAM during the period. DRAM sales in the third quarter beat iSuppli's estimate, rising 44 percent from the same quarter in 2005. Sales strength was broad based, with four out of five of the top suppliers increasing their sales by more than 20 percent compared to the second quarter. Industry leader Samsung increased its bit shipments by 21 percent and remained in the top spot among DRAM makers. Samsung said it aims to boost its market share in 2007. During its recent earnings call, Samsung announced that it would increase its DRAM bit growth by a stunning 90 percent in 2007, with its goal of reaching 35 percent to 40 percent global market share for the year. Fourth placed Micron Technology Inc.'s market share decreased again in the third quarter. The company's market share gap with No. 5 Elpida Memory Inc. is now a mere 0.4 percentage points. iSuppli predicts that Elpida will surpass Micron in the fourth quarter, assuming that Elpida's bit growth increases at a similar rate during the period. Elpida in the third quarter expanded its sales by a remarkable 105 percent compared to the third quarter of 2005. While Qimonda and the other top makers performed well in the third quarter, the second-tier Taiwanese DRAM players posted the best performance among all suppliers. Powerchip Semiconductor Corp. and ProMos Technologies Inc. led the way among the Taiwanese suppliers, increasing their DRAM sales by 30 percent and 59 percent, respectively. Their total DRAM sales growth rates were even higher. However, both companies' foundry business negatively impacted their overall growth this quarter, and since iSuppli excludes foundry volume from its market share analysis, this was not recorded. As commodity PC DRAM prices increased significantly during the third quarter, Taiwanese suppliers outperformed their tier-one rivals in terms of growth and profitability. This was due mainly to high pricing in the spot market, which is where the majority of the DRAM business is for Taiwan suppliers. The improving DRAM memory market has prompted iSuppli to revise its forecast. iSuppli's 2006 DRAM sales forecast now calls for $33 billion in revenue. This compares to iSuppli's previous estimate of $31 billion. However, in line with iSuppli's downgrade of the near-term DRAM market conditions from "positive" to "neutral" in early October, sequential revenue growth in the fourth quarter is expected to be 5 percent, much lower than the third quarter's 23 percent.