One of the most acute topics of the last few days is the sharp memory prices growth. In the first place it has to do with SDRAM DIMM memory modules. It was on purpose that we didn’t comment in any way on the matter until now, waiting for the price increase to overwhelm Pricewatch as well and for the memory manufacturers to express their position and share some forecasts, in order to make the correct conclusions and estimates. Having watched the prices growing in Pricewatch for three days now and having got some comment from the memory manufacturers we are ready to share some info with you, to make the picture more or less clear.
At first, let’s address the current prices:

• PC133 SDRAM prices have really got significantly higher. Three days ago you could find 256MB memory modules selling for $12. Now there is not a single offer like that. Yes, there are some places offering these modules for $15-$20, however, most stores have already reached the $25-$30 rate.
• The situation with 128MB PC133 SDRAM modules is almost the same. And as for 64MB PC133 DIMMs, the picture is absolutely paradoxical. The prices in the first 10 offers taken for consideration differed by the good 12% ranging from $1 up to $12.
• As for PC2100 DDR SDRAM, the situation is a little bit better: the prices didn’t grow up that greatly. 256MB memory modules cost $35-$40 on the average, i.e. not much more than the PC133 SDRAM modules of the same size.
• RDRAM is hardly of any interest to the public right now that is why we decided not to take it into consideration here. We would only like to note that 256MB PC800 memory module now costs around $90.

And now a bit more of additional info:

• All the memory manufacturers have suffered losses producing memory lately, and the cost of memory chips was even lower than their production cost.
• The memory production shrank, but not globally.
• All the memory manufacturers move to production of chips with higher capacity (256Mbit and up).
• Taking into account the growing popularity of DDR SDRAM, no wonder that many memory makers started increasing the production of this memory type at the expense of the regular SDRAM.

And now we will try to figure out what’s going on, actually. It is evident that there is hardly any memory manufacturer, which will be willing to produce unprofitable goods, however, we have been watching a surprising unanimity of the memory makers, which kept reducing the memory prices one by one. Yes, many people were talking about the overproduction crisis, however, was it exactly the case? Of course, some overproduction crisis could be there, but we wouldn’t call it that overwhelming. Because the memory chips were sold for the prices over 3 times lower than their actual production cost! One of the possible explanations for this strange position is probably the desire to force Hynix leave the arena, as one of the most technologically outdated manufacturer. Now that the Korean government and banks showed the whole world that they would in no case “cart” this company (read: let them go bankrupt), further damping lost sense.
Frankly speaking, it doesn’t matter that much if this supposition is true or not. The important thing is that the memory manufacturers “suddenly” started raising the prices for memory chips and as a result, the memory modules also got more expensive. At present all the manufacturers list two major reasons for that:

1. They managed to reduce the production and to level out the demand and the supply a bit.
2. On the threshold of the Christmas sales, the demand grew up.

In fact, we have every reason to believe that this is not true. As we have already told you, the DRAM production decrease did take place, however, it wasn’t that great. And as for the holiday season, many analysts and even manufacturers claimed that there would be no seasonal demand growth this year.
What are the real reasons then? The only thing that can justify this sudden price growth is the shift from SDRAM production to more profitable DDR SDRAM production. There is at least one argument for that: DDR SDRAM prices didn’t rise so greatly as SDRAM prices. However, we think that the No 1 reason is different: the memory manufacturers simply managed to agree upon something at once and they all to the last man increased the prices. And they did have a real reason for that: the production cost has been much lower than the chips prices for a long time.
For us, the customers, it is a much more vital question what we shall do in this situation. Shall we rush to the stores and buy PC133 before it gets crazily expensive? Or shall we take out time and wait for the things to calm down a bit? Or shall we buy DDR SDRAM? There is no single answer to this question. The memory manufacturers will evidently do their best to stimulate the rush for memory. The rush bears shortages and shortages result into prices increase. And what else do the manufacturers actually need? The longer this exclusive circle will last, the more cream the memory manufacturers will skim off.
As a result, we wouldn’t advise you to rush for memory modules, because it will result into even greater shortages and play into the hands of memory makers pushing them to further prices increase. On the other hand, if we advise you not to hurry, we will condemn ourselves to numerous accusations in being biased, etc if the price growth last longer than we expect it to. So, anyway, we won’t manage to solve the problem alone that is why we will take the risk to share some of our recommendations with you, guys:

• If you really lack system memory (for instance, you have far less than 256MB, though it depends on the individual preferences), then go for it now. Because we don’t have any idea how long the memory maker will maintain this rush, and all of all want to have normally running systems now. Especially, since you won’t lose a lot of money even if the rush stops and the prices return down to normal level.
• If you have enough memory for comfortable work (we believe that 512MB is more than enough for the majority of the today’s users), then there is no cause for concern. Who knows what may come out of it in the end?

And at last a bit on the long-lasting tendencies, which do not depend that much on the manufacturers’ desires:

• All memory manufacturers shift to production of twice as large memory chips (256Mbit) that is why the cost of 1MB should inevitable go down with the time. The same way it happens with the hard disk drives, for example. By the way, if you turn to a bit of history, you will notice than all the memory manufacturers have rested too long with the older technologies now (new technologies mean new investments, and why should they invest anything if the memory is anyway selling just perfectly?). They hardly increased the chips capacity that is why the current situation is quite logical. Can you imaging what chaos could emerge in the HDD market, if the average hard disk drive were only 1GB or 2GB big?
• The industry is little by little moving from SDRAM to DDR SDRAM, that is why SDRAM should slowly get more and more expensive, and the latter – cheaper and cheaper. However, no one can predict with 100% probability what course the events will take.
• Anyway, the memory makers will always strive to sell their products at higher prices than the actual production costs. So, please, bear it in mind when you will think of buying some memory.