Pricing difference between 512Mb DDR and DDR2  memory chips has shrunk to a less than 1%, down from 30% early this year and it is likely that within the next weeks pricing for DDR2 and DDR memory will cross and the former will be cheaper than the latter. This, however, is not because the market will switch to DDR2, but because the demand for 512Mb DDR chips is strong.

At press time 256Mb DDR2 533MHz device cost $3.20 in average on the spot market, whereas a 512Mb chip was quoted at $5.22, in average, according to DRAMeXchange. DDR memory at 400MHz was priced at $5.19 and $2.41 in average for 512Mb and 256Mb chips respectively on Thursday, which is in-line with pricing of the recent weeks. By contrast, average spot price of 256Mb DDR2 SDRAM memory chip (533MHz) was $3.32, whereas a 512Mb device cost $5.58 on the 16^th of June, 2005, higher than today.

As expected earlier, DRAM pricing did not drop significantly compared to the levels seen during the last few months.

According to a report from JP Morgan, DRAM saturate was likely to extend from 2% in Q2 to 10% in Q3 due to weaker demand and increasing inventory. Even though several global manufacturers of memory were transiting some of their production from DDR chips to DDR2 and NAND flash production – which might alleviate some imbalance in the market – JP Morgan believed oversupply would not ease until the Q4 2005.

In early April a report claimed that Samsung has significantly – by 20% – lowered DDR2 pricing for its customers, which might have catalyze the current situation on the market.