Memory prices soar and soar

Memory prices soar and soar

The cost of a PC may be plummeting but a global shortage of memory, especially SDRAM, over the last month has significantly hiked up memory prices.

Specialist memory distributor Norse Technology has experienced tremendous price ups and downs from the end of June to its current sales value, according to Colin MacFarlane, director of Norse. "There was a low on the 30th of June and then a jump in prices of about 20 per cent. Then on August 25th it jumped up again by 45 per cent. In the last week alone it has gone up by 8 per cent," explained MacFarlane.

Norse, and most other memory distributors and buyers, had grown too complacent about continuously diminishing prices. "Because prices kept falling for such a long time we carried the minimum stock. Everyone got caught out - we all had to buy more stock at a much greater cost," said MacFarlane.

And customers used to the price of memory falling have gone into denial. "Business has definitely dropped off since prices increased. People have got a wait-and-see attitude," said MacFarlane.

Yet while people have been waiting, prices have continued to soar, with MacFarlane not expecting any respite. "Prices will probably level out where they are now but there won't be any decline until at least after Christmas."

Even this scenario seems doubtful though, with MacFarlane only one industry pundit who places part of the blame for the increasing prices at the feet of memory manufacturers. "There is some kind of coercion by manufacturers to get prices back up to profitable levels," he said.

Market forces have also conspired to push up the price of memory. Taiwan's memory manufacturers experienced production problems due to power failures, putting them out of business for a week and stalling 2 per cent of the global memory output. "This might not sound like a lot but in a market where there is already good demand it has a rippling effect," said MacFarlane.

And that ripple could quite easily turn into a tidal wave with many memory manufacturers struggling in the transition from 64MB memory to 128MB memory. "In the long run it [128MB memory] might be cheaper to produce but at the moment they [memory manufacturers] are having problems with yield," explained MacFarlane.

One of the real victims in this whole scenario will be the third-party mem-ory distributors and their customers, who are well down the food chain when it comes to securing a share of the limited stock available. "OEMs and PC manufacturers are increasing their machine output, ready for the peak season. Because they have big contracts with the memory suppliers they have first priority on all supplies," said MacFarlane.

Third-party distributors are also in the difficult position of having to explain and pacify their own customers, irate over the unforeseen price increases. "Sometimes you can't even put out a price list," said MacFarlane. "But we have to pass the price onto our customers so we advise a few big clients on a daily basis."

But for those not so fortunate, the present situation has come as a rude awakening. Managing director of Microarts Australia, Dean Wilson, is struggling to keep both himself and his customers up to date. "We have seen PC SDRAM memory prices increase form a low of $50 for a 64MB module to around $240 a module and still increasing," said Wilson. "We have little information to give our customers," he said.

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