Market Insight

Intel’s recent recall of 8 million Sandy Bridge chipsets could have significant implications for DRAM makers. iSuppli currently forecasts approximately 90 million PCs will be sold in Q1 2011. If one assumes the 8 million recalled chipsets would have shipped in Q1 then they represent approximately 9% of PC shipments this quarter – or about 5% of DRAM shipments. Clearly this recall will have an impact on DRAM companies.

The likely results are as follows: Initially there will be near-term additional availability of DRAM as PC OEMs reduce shipments. This will be short-lived as other CPU options fill the void left by the Sandy Bridge recall. Once Intel is able to ship its fixed chipsets then there will be a slight swelling in demand as PC OEMs play a little catch up – this will lead to a tighter DRAM market. It is important to realize that some Q1 PC sales will be lost as customers forestall their purchase for the Sandy Bridge fix, effectively lengthening the lifespan of their PCs. The net result will be slightly lower revenues (<1%) for DRAM makers but the timing of those revenues will be disrupted.