A glut of DRAM (dynamic RAM) on the market and sluggish demand because of a holiday in China caused the price of the most widely used computer memory chip to fall 25 per cent in a matter of weeks, DRAMeXchange Technology Inc. reported today.
The contract price of 512Mbit, DDR2 (double data rate, second-generation) DRAM chips that run at 667 MHz dropped 25 per cent from two weeks ago to $1.31 each, a new low for this year, according to DRAMeXchange, which runs an online trading site for the chips. The previous low was $1.75.
Contract DRAM prices for DDR2-667 chips have fallen 79.4 per cent so far this year. Users benefit from lower DRAM prices in two ways. PC vendors often increase the amount of DRAM per computer when prices are low, or offer additional DRAM as an incentive to buy, and the price of DRAM modules found in stores normally comes down within a few weeks or a month after price declines on global markets.
Contract prices are typically renegotiated every two weeks between DRAM makers and PC vendors such as Hewlett-Packard Co. and Dell Inc. Around four-fifths of all DRAM is sold by contract, while the rest is sold on a spot market similar to commodities trading in oil and gold.
DRAMeXchange blamed China’s National Day holidays, which gave a week’s vacation last week, for part of the drop. China accounts for the bulk of DRAM spot trading because most of the world’s PCs are assembled there. The holiday caused the spot market to nearly cease trading, impacting contract prices, the company said.