DRAMeXchange, a research division of TrendForce and a major tracker of dynamic random access memory (DRAM) market, reports that prices of computer memory were increasing throughout the whole December. The analysts  believe that the prices will continue to grow as manufacturers reduce their output in a bid to balance supply and demand.

Affected by spot market prices, DRAM contract prices increased by 2% on average in the first half of December, and the uptrend continues in the second half of December. Prices for mainstream 4GB modules in particular rose, by 3.17%. Deals were concluded at around $16.25, $0.50 higher than average contract price ($15.75), an indication that some DRAM suppliers have more negotiating power than others.

At press time, one untested [eTT] 2Gb DDR3 chip cost $1.019 on average at Taiwan's spot market, 2Gb DDR3 1333MHz/1600MHz chip's price was approximately $1.096/$1.061, whereas 4Gb DDR3 1600MHz memory IC was priced at $2.296 on average on the spot market. It is noteworthy that spot prices increased considerably compared to previous months.

From the market perspective, as Samsung and SK Hynix plan to drastically cut PC DRAM production levels in 2013, focusing CapEx and technology migration on mobile DRAM products, PC OEMs are left with fewer suppliers to choose from, and subsequently, less bargaining power. DRAM manufacturers are gradually gaining more control over price. While PC demand visibility is limited, due to supply side factors and PC OEMs’ inventory restocking, DRAM prices will likely stay on an uptrend at least until it hits the South Korean manufacturers’ break-even point.

Looking towards the first quarter, past experiences show that there is generally no strong demand growth aside from Chinese New Year purchasing. However, due to the aforementioned supply side changes, the sufficiency ratio is expected to improve significantly compared to the previous quarter. While the market is not likely to see short supply, certain types of chips will see significant increases as technology migrates to the next-generation process. As long as the necessary capacity cuts continue to be made, TrendForce forecasts supply and demand will likely balance out in 2013, with the six-month commodity DRAM downtrend finally coming to an end.

Tags: DRAM, Business, DDR2, DDR3, Samsung, SK Hynix, Micron, Elpida, Powerchip Semiconductor, Inotera, Nanya