EL SEGUNDO, CA — Tight supplies, rising prices and increasing demand for DDR SDRAM caused global DRAM revenue to exceed expectations in the second quarter — and boosted the market share of the Taiwanese suppliers that specialize in the part, according to a preliminary estimate from iSuppli Corp.

Worldwide DRAM revenue rose to $7.5 billion in the second quarter, up 14.3% from $6.6 billion in the first quarter. iSuppli had expected revenue growth of only 4.4%. Many suppliers are phasing out production of DDR in favor of the new mainstream DRAM: DDR2. This constrained supplies of DDR, contributing to an increase in prices. In contrast, prices for DDR2 declined during the quarter as availability increased. The overall impact was a rise in global DRAM prices of 4% compared to the first quarter.

Three months ago iSuppli had predicted a 4% decline for the quarter, which would be closer to a normal decrease in DRAM pricing. Confirming iSuppli’s prediction from three months ago, overall DRAM bit production growth worldwide increased by 10% during the quarter compared to 15% during the same quarter last year. This deceleration in bit production growth provided further support for pricing. Other supply-side factors boosting DRAM pricing included tight availability of DDR2 667 and a shortage of 1Gbit density parts.

“Along with rising prices, tighter supplies and lower production, the DRAM market’s strong performance in the second quarter was fueled by better-than-expected demand,” said Nam Hyung Kim, principal analyst for iSuppli. “PC core-logic chipset suppliers in the second quarter aggressively promoted products that supported DDR, boosting demand for the memory just as DRAM suppliers were phasing out production of the part.”

Due to the rise in DDR prices, the smaller Taiwanese suppliers that are the main suppliers of the part outperformed the tier-one suppliers, according to iSuppli’s preliminary ranking. The three major Taiwanese suppliers, Nanya Technology, Powerchip Semiconductor and ProMOS Technologies, all achieved sales growth of more than 20%  sequentially in the second quarter.