The computer memory industry stands at a crossroads, and analysts can't agree on where it's going. Will 2011 be a year of feast or famine?
The industry watchers at iSuppli say the market for dynamic random access memory chips is "set for double-digit decline this year." Citing massive volume increases but a steep drop in average unit prices caused by another round of oversupply, iSuppli predicts a 12% drop in total industry revenue.
That's terrible news for memory producer Micron Technology
But iSuppli seems to stand alone in that conclusion. Micron had four analysts up price targets overnight, and the bullish observers agree that memory pricing will stabilize and turn back up in the near future. In this view, Micron looks tremendously cheap and that consumerism festival would have to wait until the next downturn.
So whom do you believe? The last supply glut in this industry lasted for the better part of two years, and this instance has barely even started. DRAM module maker SMART Modular Technologies
Sure, this could be a mere speed bump -- but the malaise has by all accounts spread across geographies and companies to encompass the whole industry. I'm more inclined to believe the iSuppli report and discount the sudden love for Micron. Be fearful when others are greedy, and there's plenty of greed around the leading DRAM specialist today.
Add Micron to your Foolish watchlist to keep tabs on the pricing situation.