X-bit labs

Memory Market Overview: May 2005

Category: Memory

by Anna Filatova

[ 05/11/2005 | 02:30 PM ]

What has been happening in the memory market lately? We are going to discuss the situation with the memory prices, the changes in the market shares, new established joint projects and of course, new products that might be of interest to hardware enthusiasts and overclockers, as well as to ordinary users.

Table of contents:

When something bad has been happening for a long time this tendency should end sooner or later. This is exactly what happened in the beginning of April, when the players in the memory market evaluated the current situation and arrived at the conclusion that this is the lowest the memory could drop. Therefore, considering that there is no room for further price reduction, they stated the upcoming stabilization in the memory market. So, the first week of the past month started with the bull speculation. As a result, the price for 256Mbit DDR400 chip grew up from $2.43 to $2.55. And that was it: the strategic situation in the memory market with pretty low demand didn’t change that much. Moreover, the manufacturers will definitely do their best to stimulate the demand growth keeping the prices at the minimum acceptable level at the same time.

So, no wonder that in the second week of the month the prices moved back to $2.4 per chip. Then the price drop continued for another while until it hit $2.34, but that was mostly inertial movement, I should say. It is true: the $2.4-$2.3 for a single 256Mbit DDR400 chip seems to be the bottom for the today’s market. So, it is not at all surprising that the memory prices stabilized around $2.35-$2.39 for a chip like that, as this price point is closely connected with the production cost of these chips.

As a result, it looks like the prices will hardly fall really far below this point, but as for the growth, it is not just possible: it is inevitable. Back-to-school season is approaching and this year I assume it will play its role in the market situation, so that the prices will finally grow up in Q3. So, this seems to be the best time to upgrade your system memory if you need to. No matter what but contemporary mass applications (operating systems and office packages in the first place) still do not require more than 512MB of RAM anyway.

Of course, this situation has its influence on the monthly results of the memory manufacturers. Summing up the results of the Q1 2005, Nanya alone indicated that their average sales price for memory chips dropped down by 24%. Of course, there are still two ways to improve sales revenues: you either reduce the production cost, or resort to some trick to raise the average price back up.

Just like its competitors, Nanya is trying to move in two directions at the same time. The growing yields and production cycle improvements that allow minimizing the production time stimulate the reduction of the production cost of the memory chips. At the same time, the average sales price should get higher because the share of more expensive DDR2 memory in the company’s sales volume is growing, too. Nanya is traditionally super-optimistic here: they believe that in Q3 already this memory type will win 60% of the entire memory market.