DRAM Prices Expected to Drop Again

August 4, 2008 – 2:44 PM

Good news: the perpetual price drops in the DRAM industry are back again, according to an alert issued Monday by analyst firm iSuppli.

The report was targeted at OEMs, iSuppli’s clients, but the news actually benefits consumers: after a mild recovery in the second quartr, prices are expected to drop in the third quarter as supplies outstrip demand.

“The average DRAM contract price is expected to decline by more than 10 percent from the current level by the end of the third quarter,” predicted Nam Hyung Kim, director and chief analyst for memory at iSuppli, in a statement. “The inventory level in the channel and among PC OEMs has increased compared to the second quarter. Global economic conditions are adding more uncertainty on the demand side of the equation.”

The reason? Moore’s Law. Although demand has remained somewhat constant — and typically picks up in the second half of the year, as PC OEMs build inventory for the holiday sale season. According to iSuppli, DRAM wafer output will rise by just 10 percent this year. But both Samsung and Hynix, the top memory makers, are moving aggresively to sub-60-nm manufacturing technologies, meaning that more DRAM chips are being manufactured per wafer. That means the available number of DRAM chips in the market is actually incrasing sharply, even if wafer starts are holding relatively steady.


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