Osha and others generally agree that Micron will weather the storm better than most companies. Nonetheless, the downward trend in prices and excess inventory will affect it. At the end of the February quarter, Micron is likely to be close to the break-even point, Joseph said. It's a rough turnaround for an industry many predicted would see rising prices and tightening demand earlier this summer. Unexpectedly strong demand for PCs in the first half led to shortages and rising memory prices.
Manufacturers forecast a seasonally stronger second half.
Instead, PC sales dropped. To compound matters, Micron, Samsung and other manufacturers continued to shrink the size of their chips through manufacturing improvements, which has added to the volume of production. It is difficult to assess how much excess memory is available on the market, as it is spread among PC makers, distributors and memory manufacturers. With prices wallowing near manufacturing costs, it won't be long before some smaller manufacturers leave the industry or severely curtail production. The decline in pricing since the end of the summer has been really dramatic.