Anyone looking to add a bit more memory to their computers won a gift from the DRAM (dynamic RAM) industry. Heavy competition has caused prices to tumble and industry analysts predict further price declines.
The contract price of the most widely used DRAM chips, 512MB DDR2 chips that run at 667MHz dropped 12.5 per cent from two weeks ago to US$1.75 each as of Thursday, a new low for this year according to DRAMeXchange Technology Inc., which runs an online trading site for the chips.
That’s great news for users for three reasons. DRAM price declines increase the likelihood that PC vendors such as Hewlett-Packard Co. and Dell Inc. will add more DRAM to the computers they sell, or offer extra DRAM as an incentive; it also gives users a chance to buy more DRAM on the cheap; and it generally spurs memory chip makers to move forward on new technology that will ultimately increase computing performance.
Contract DRAM prices for DDR2-667 chips have plunged 70.5 per cent so far this year to the Thursday low. The main reason is because memory chip makers built too many new production lines in anticipation of strong demand for Microsoft Corp.’s Windows Vista, which requires more DRAM per PC, as well as because stronger DRAM prices in general for the past few years was a sign to some that the market had stabilized, analysts say.
DRAM prices may continue to decline a bit further, but downside appears limited, according to Gartner Inc. Today’s pricing is at a similar level to the lows reached in May of this year, when DRAM makers refused to sell because the price had hit their cash cost.
“However, we may see some activity below this level, because some brokers and distributors who are holding inventory may be prepared to sell at a lower price to clear stock,” the market researcher said.
