Samsung Electronics has lowered pricing on its DDR2 memory modules by as much as 20%, according to a report from DigiTimes web-site citing distributors of chips. The move comes as memory prices are continuing to soar and may potentially increase popularity of DDR2 SDRAM among users, but only in case there is sufficient supply with platform chipset that support DDR2.

Samsung’s contract quotes for 512MB DDR2-533 modules (comprised of eight 512Mb chips) now range from $52-53 (equivalent to $6.63-6.50 per chip), down from last month’s $64-65 to within a 5% difference of the prices for 512MB DDR2-400 modules, according to the report.

According to DRAMeXchange, contract price of 512MB DDR2 DIMM at 533MHz is $62.60. The cost of similar memory module on spot market is unclear.

The price slash of 20% comes in a bid to spur PC OEMs to accelerate migration to the DDR2 and also increase the Samsung’s revenue. However, the speed of the migration will also depend on whether there is sufficient supply of Intel chipsets and CPUs supporting the PC2-4300 memory.

According to a report from JP Morgan, DRAM saturate is likely to extend from 2% this quarter to 10% next quarter due to weaker demand and increasing inventory. Even though several global manufacturers of memory are transiting some of their production from DDR chips to DDR2 and NAND flash production – which may alleviate some imbalance in the market – JP Morgan believes oversupply will not ease until the fourth quarter. Samsung aggressive push of DDR2 can further drive memory prices down, which may be negative for the industry.