Memory prices drive down chip revenues

Motherboard semiconductor revenues plunged 27.9 percent to $7.5 billion in the second quarter from the previous three months, as falling DRAMs, flash memory chips, and SRAMs prices put the squeeze on revenues, according to an industry report released today.

International Data Corporation reported that revenues for PC motherboard DRAM fell 46.1 percent from the previous quarter and that SRAM dropped 28.5 percent compared with the first quarter, according to the Associated Press.

But by the end of the year, IDC forecasts that motherboard semiconductor revenues will fall a slight 4.1 percent to $32.9 billion, compared with the previous year. Revenues from PDA (personal digital assistant) motherboards posted the smallest drop, with $21.5 million in sales.

"Even though revenues have fallen, manufacturers' profit margins have remained intact. It costs less for them to produce the motherboards with the falling memory prices," said Kelly Henry, an IDC analyst.

But the amount they can charge for the motherboards, however, also declines and hence lowers their revenues, she added.

Revenue declined despite a 2.7 percent increase in the number of units shipped to 18.5 million in the second quarter. In the first quarter, the number of units shipped dropped 7 percent to nearly 18 million units, compared with the fourth.

That shipment decline in the first quarter over the fourth was the main contributor for the 11 percent revenue decline during that quarter, Henry said.