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    Home Latest News

      DRAM Prices Nudging Up

      Written by

      Mark Hachman
      Published December 7, 2001
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        The prices of DRAM are slowly rising, as expected in the height of the fourth-quarter selling season.

        Spot market watchers and Wall Street have noted a sudden jump in the spot market price for various flavors of memory modules. One industry analyst attributed the price increases as a genuine sign that the PC market was showing some small signs of recovery, an opinion bolstered by statements made by Advanced Micro Devices Inc. and Intel Corp. on Thursday.

        The price hikes are more significant from a percentage standpoint, not an actual dollar amount. For example, in a note published Friday morning, Eric Rothdeutsch of investment bank Robertson Stephens, San Francisco, noted that generic spot prices of 256-Mbit DDR memory had jumped overnight from $5.80 to $6.20. Prices of 128-Mbit DDR increased from $2.65 to $2.90, equivalent to the prices paid yesterday and today for 256-Mbit SDRAM.

        Those prices reflect the price of an individual memory chip, however. The price of a memory module, which includes several DRAM components, has nearly doubled since mid-November, when prices started rising in expectation of increased demand.

        According to ConvergeNet, a spot-market tracking service run by Converge Inc., Peabody, Mass., the average price of a 128-Mbyte PC133 module is $15.50, up from a 52-week low of $9.50. Historically, prices of DRAM steadily decrease, fueled by depreciation, market competition, and an increase in the efficiency and volume of DRAM manufacturing.

        Spot market prices also reflect the momentum of the market. In lean times, spot prices are usually higher than the contract prices PC OEMs pay for a bulk quantity of DRAM chips or modules. Usually, spot prices for DRAM are lower than contract prices, as PC vendors unload excess parts on the open market at a discount.

        The uptick in holiday prices usually begins near Thanksgiving, the annual kickoff to the consumer sales season. But the price hikes arent usually fueled by U.S. consumer demand for PCs; American fourth-quarter PC demand is usually “flattish” when compared with the third quarter, according to Andy Bryant, chief financial officer for Intel Corp., Santa Clara, Calif., in a conference call Thursday. Japan and Europe usually fuel the holiday rush, Bryant said.

        The price increases are both a boon for the DRAM industry and a burden for end users, which have been blessed with rock-bottom prices on DRAM for over a year. Infineon Technologies has been said to be sniffing about for a merger partner or acquisition, while DRAM giant Micron Technologies Inc. has formally approached Hynix Semiconductor about a merger or other partnership.

        “I dont know if excited is the right word, but it is encouraging,” said Sherry Garber, memory analyst with Semico Research Corp., Phoenix. “A lot of it is being driven by the Pentium 4 with DDR transition. That transition is happening, and that means new systems are being built, which is a good sign.”

        Intel Corp.s first DDR chipset, the Intel 845D, is expected to be released to motherboard manufacturers at the end of next week. Privately, motherboard makers have been showing Intel 845D boards since June.

        Mark Hachman
        Mark Hachman

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