Micron Technology, the top U.S. maker of memory chips for computers, sees favorable trends including an uptick in contract prices for DRAM as small players are forced out of the capital intensive industry.
Prices for DRAM, used in personal computers and increasingly in mobile devices, have plunged in recent quarters, pressuring small manufacturers without sufficient cash to invest in more efficient technology.
But Micron President and Chief Operating Officer Mark Durcan told analysts at a company event in Scottsdale, Arizona, that the downturn in DRAM prices was turning around and he was upbeat about ongoing negotiations.
Because of Chinese New Year, we're not finished with our contract negotiations. Our expectation though is that there will be some modest uptick in contract pricing as well post-Chinese New Year on the DRAM front, Durcan said. Chinese New Year fell on February 3 this year.
Prices for Micron and its competitors' NAND memory, used to store data like music and photos on mobile devices, are expected this year to be supported as growing demand from smartphone and tablet makers like Apple Inc helps soak up increasing production.
Net/net on the NAND and DRAM side -- very favorable pricing trends, Durcan said.
Shares of Micron, which competes with industry leader Samsung Electronics as well as Elpida and Hynix Semiconductor, rose 1.1 percent to $11.43 on Nasdaq at mid-afternoon.
Demand for NAND memory for tablets is expected to expand over 400 percent this year, market research firm IHS iSuppli said on Friday.
And specialized DRAM with advanced power management aimed at mobile devices like tablets and smartphones is seen growing 71 percent this year, according to IHS iSuppli.
Other memory makers have also said they see signs of stability in the DRAM market, where prices are constantly under pressure from technology making production less expensive.
This week, Japanese PC chip maker Elpida said it expects DRAM demand to exceed supply by the second quarter as clients' inventory drops and they start placing new orders.
Micron's stake in a NAND manufacturing joint venture in Singapore is increasing since partner Intel Corp declined to increase its investment in the facility.
Micron had been selling half of the venture's output to Intel at cost, but in the future will be able to sell 78 percent of the facility's production at higher margins to its customers.
(Reporting by Noel Randewich; Editing by Tim Dobbyn and Richard Chang)