X-bit labs

Micron Warns About Soaring DRAM Prices.

Category: Memory

by Anton Shilov

[ 07/13/2004 | 11:40 PM ]

Micron Technology recently told in an interview to Reuters that memory prices will be climbing throughout August to November, when PC makers see a strong demand for their products. This contradicts analysts, who believe that the market will face oversupply and dropping prices of DRAM.

“The August to November period is when the demand is the strongest seasonally on back-to-school PC demand,” said Michael Sadler, Micron’s vice president of worldwide sales.

“Investors fear corporate earnings estimates are still too optimistic. They are concerned about possible oversupply and weakness in demand amid the United States raising interest rates and China preparing for a slowdown in its fast growing economy,” said Song In-ho, a fund manager at Kyobo Investment Trust and Management.

Earlier this year memory makers and analysts already warned about soaring DRAM prices, citing back-to-schooland Christmas seasons as the main drivers for the demand increase for dynamic random access memory.

Typically memory makers start preparations for back-to-school season in the second half of July or in the first half of August. In case the demand for DRAM rises dramatically within the next few weeks, the prices may soar.

Not all PC makers are likely to rocket their DRAM purchases. Largest computer makers usually accumulate memory modules in stocks in order to avoid possible impact of their costs by DRAM pricing. In case the demand for new PCs is not extremely strong, and large PC makers will have enough memory for their needs, the DRAM pricing is unlikely to not uptick seriously as a result of high demand. By contract, memory makers will have to worry about oversupply.

At press time average price of 256Mb DDR SDRAM memory chip (266MHz or 400MHz) was $4.71 to $4.77 at spot-market, according to DRAMeXchange. The lowest contract price on 256Mb DRAMs was $4.50. At the end of May, 2004, spot market’s average price of 256Mb DDR memory chips was $4.80, while this year’s peak was at $6.30 per device in early April.