Memory Prices Likely to Plummet, Says Analyst

DRAM Pricing Plunge Caused by Increased Shipments Expected

by Anton Shilov
08/26/2004 | 06:53 AM

Despite of expectations, memory prices are unlikely to increase due to ongoing ramp of DRAM shipments by world’s leading maker of memory used in computers, claims Nam Hyung Kim, a principal analyst with iSuppli Corp., an El Segundo, California-based research firm.

 

Memory makers have reportedly tried to reallocate manufacturing capacities from DRAM to more profitable flash or other components, which limited supply growth of DRAM in May, June and July, causing an uptick in pricing. In August, however, leading memory makers, such as Samsung, Hynix, Micron and Infineon, started to ramp up supplies of memory for personal computers by substantial percent, which is likely to cause memory pricing plunge.

Earlier this year memory makers and analysts warned about soaring DRAM prices, citing back-to-school and Christmas seasons as the main drivers for the demand increase for dynamic random access memory. However, iSuppli analyst, whose column is published by Silicon Strategies web-site, believed that raising shipments will not allow DRAM prices to soar.

In late July, 2004, a number of memory makers, including ProMOS and Micron, expected DRAM pricing to uptick in Fall as a result of skyrocketing demand from PC makers. However, the warnings are unlikely to materialize, at least in the next few weeks, due to increased supply of DRAM chips.

At press time average price of 256Mb DDR SDRAM memory chip (266MHz or 400MHz) was $4.13 to $4.43 at spot-market, according to DRAMeXchange. The lowest contract price on 256Mb DRAMs was $4.31. In late July 256Mb memory modules cost from $4.71 to $4.77 at spot-market, while the lowest contract price on them was $4.50 per unit. 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.