DRAM prices may hit speed bump on way down

by Dan Nystedt

November 29, 2007 —

Users should not be fooled by a possible stabilizing in DRAM prices in coming
weeks because it's only a speed bump on the way down, analysts say.

Strong online sales after the Thanksgiving holiday in the U.S. could mean some
renewed need for inventory restocking at DRAM (dynamic RAM) and NAND flash memory
houses, according to DRAMeXchange Technology, a Taiwanese company that runs
an online DRAM market.

But while restocking may give DRAM sellers a short respite from falling prices,
chip makers continue to supply the market with too much memory, ensuring prices
will resume their slide swiftly, DRAMeXchange said.

Other analysts see DRAM prices continuing to drop for a while.

"Today's DRAM price drop is not about to end - it has just begun,"
said Jim Handy, memories analyst at Objective
Analysis, a chip industry researcher.

Analysts and industry players have predicted that prices may not rebound until
the second quarter of next year.

Until then, users should see bargains on DRAM modules that can easily be added
to their PCs, as well as offers for additional DRAM as an incentive to buy new
computers.

The contract price of 1G bit, DDR2 (double data rate, second generation) DRAM
chips that run at 667MHz fell 5.3 percent from two weeks ago to US$2.25 each,
a new low for this year according to DRAMeXchange. Prices of the chips were
at $3 at the start of October, when the price slump hit.

ComScore, an online
data tracker, reported that the holiday shopping season kicked off to a strong
start online last Friday, "Black Friday," with sales up 22 percent
year on year to US$531 million [M], followed by a similar surge on Cyber Monday,
a $733 million [M] online shopping record for a single day.

IDG News Service