DRAM Prices On The Rise

Computer manufacturers waiting to stock up on memory for the Christmas sales blitz may find themselves with a case of sticker shock next month, according to analysts and other indicators.

A spot check of the DRAM market this week found most prices stayed put. The exceptions are SDRAM and RDRAM, which are up in price slightly. But analysts with Deutsche Bank Securities say October should be a different story.

“Some Asian DRAM producers we spoke with believe that the first half of October contract ASP may remain flat also but expect another hike from the second half of October,” the analyst firm said in a briefing. “Overall rolling order forecasts for October from major OEMs show a 15 to 20 percent increase month over month as inventory build starts for Christmas.”

The current market is relatively stable. Deutsche Bank’s securities analysts found prices for 256Mb DDR266/333 and DDR400 largely unchanged from the beginning of the month at USD$5.10 – $5.20 and USD$5.45 – $5.65, respectively.

The firm also said overall demand-supply remains tight and inventory at manufacturers and at major hubs remain at lean levels. Rambus , Infineon (QUOTE NYSE:IFX>, Micron Technologies , Samsung Electronics as well as overseas manufacturers ProMOS and Nanya Tech are all leading DRAM manufacturers that run into this category.

“We expect 11.5 percent undersupply in DRAM in the fourth quarter of 2003. If there are no excess inventories in the channel (and we have no evidence of that) we should see further momentum in DRAM contract prices near term,” Deutsche Bank said.

Part of the ramp up may be due in part to Hynix. The chipmaker has been on a selling frenzy since the U.S. and European governments hit the company with tariffs stemming from accusations the South Korean government had unfairly subsidized the chipmaker.

The issue has been leaving some spot-price dependent chipmakers in a bind as they wait for PC demand from Europe to catch up with the U.S. and Asia.

Sharkey Extreme editor Vangie Beal recommends keeping an eye on your favorite vendor’s Web site and watch for free or discount shipping deals – that alone could be worth a few dollars in the end price.

The extreme PC user site publishes a weekly memory pricing guide and commentary.

“It’s tough to peg where memory prices will go,” Beal said. “Last time out, we saw a slight downturn in overall memory prices, and while this week isn’t all bad news, the trends are pointing up.”

Editor’s note: Sharkey Extreme is also owned by Jupitermedia, the parent of this Web site.

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