With the prices of DRAM chips (a type of memory chip) on a downward trend, manufacturers have given disparate views of the market for the second half.

According to market research firm DRAMeXCHANGE, the average sales price of the DDR3 1Gb eTT chip stands at US$2.31, down 25.24 percent from the US$3.09 in March. Since July, the average sales price of the chip has fallen 6.1 percent.

With falling prices, DRAM manufacturers have different takes on how the industry will fare in the second half.

ADATA, which makes modules using DRAM chips, saw its gross profit margin slide to 1.66 percent for the second quarter, a 4.25 percent loss from the 5.91 percent for the first quarter. The company posted a net loss of NT$419 million for the second quarter, translating into loss per share of NT$1.87.

The company however was still upbeat about the second half, saying supply and demand will reach equilibrium in the third quarter given a PC replacement cycle among enterprises.

Frank Huang, chairman of Powerchip Semiconductor, held a similar attitude.

The market will gain momentum in the second half, due to strong demand from notebook PC contract manufacturers and limited growth of DRAM supplies, he said.

He said more rational competition and less volatility in the market will help beef up manufacturers' profitability, adding the industry will be stable for two to three years.

However, Pai Pei-lin, vice president of Powerchip's rival Nanya Technology, did not share Huang's optimism.

He said DRAM prices will keep falling in the second half, given a possible delay of the much-anticipated PC replacement cycle and tepid demand from contract manufacturers, who are working to lower costs.

While DRAM manufacturers' outlooks are poles apart, nearly all memory testing and packaging firms are optimistic about the next six months.

Their optimism comes as demand for testing and packaging operations is growing, after manufacturers increased output with more advanced manufacturing technologies.

Walton Advanced Engineering Inc., for example, in the first half increased capacity to test an additional 10 million chips, and utilization for the expanded capacity is approaching 100 percent.

The company recently added a new plant with capacity to test 10 to 15 million chips, with mass production expected to begin in September. The plant will run at full capacity in one to two months, the company predicts.

The capacity expansion is expected to help boost Walton's sales next year to NT$10 billion, according to industry experts.