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Report: Memory makers get while the gettin's good

Worldwide DRAM revenues soared in the second quarter, but 2005 isn't looking so hot, says Gartner.

Hynix Semiconductor passed Micron Technologies to take over the No. 2 spot in the market for dynamic random access memory during the second quarter, Gartner Dataquest reported Thursday.

Samsung Electronics retained its hold on the top spot, the market researcher said, while the overall market rose 20 percent globally.

Samsung's nearly 25 percent quarter-on-quarter growth pushed up its market share to 29.7 percent from 28.4 percent in the first quarter, with revenue climbing to $1.98 billion.

To wrest the second position from Micron, Hynix improved its share from 16.5 percent to 17.1 percent. Micron's share, on the other hand, slipped to 15.3 percent, from 18 percent last quarter.

"Hynix's strong presence in the legacy and graphics DRAM segments, which had strong pricing, enabled it to outgrow its rivals," Andrew Norwood, principal analyst with Gartner, said in a statement.

Warning bells are already sounding for memory chip vendors, however. While surging memory prices have helped companies book better profits so far in 2004, the industry is seen heading into a recession during 2005.

Meanwhile, DRAM vendors are increasing their capital expenditures on new production facilities. These will come online in late 2005 and through 2006, triggering an oversupply-driven downturn, Norwood said.