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Price pressures, shortages hit memory channel

Price pressures, shortages hit memory channel

System builders are struggling to source DRAM memory as worldwide product shortages and rising prices hits the memory channel.

Earlier in the month, research company, iSuppli, reported that large PC vendors had stocked up on DDR SDRAM ahead of anticipated price rises. Locally, this buying has led to major shortages – and with demand starting to outstrip supply, prices are on the rise.

In the last three weeks, local memory module manufacturer Legend Performance Technology reports that DDR 400 prices had risen by about 24 per cent.

Prices were still rising, managing director, Bradley Dowe, said.

Fellow memory vendor, Kingston Technology, has found that prices for 256MB and 512MB DDR 333MHz and 400MHz modules had risen to their highest ever levels in recent weeks.

The causes, both vendors suggest, is an imbalance in supply and demand.

“The entire channel market is currently undersupplied,” Dowe said.

Legend’s direct supply status with the major memory fabricators has enabled the company to meet client demand expectations.

Dowe said that the unexpected success of flash memory hadcaught manufacturers unprepared – and many had used up all the capacity of their fabrication plants to manufacture these more profitable lines.

He said that many fabs had also been working to shrink their production process down to 0.11 micron, a transition that had proved complex than first anticipated, and produced lower yields than first anticipated.

Country sales manager for Kingston Technology Australia, Keith Hamilton, said DRAM manufacturers were also increasing their offerings to large PC OEMs and module makers, leaving less DRAM supply for the spot market.

Coupled with these supply issues was a lift in world economies and the subsequent sale of IT products that use memory.

Hamilton expects prices to continue to rise in the short-term.

“Our view is that, in the short term, it is probable that supply may tighten further,” he said. “It would not surprise me to find resellers viewing today's prices as very fair and reasonable in two weeks time. Looking farther ahead supply is likely to remain tight well into the next quarter.”

Dowe expected that once the 0.11 transition issues were resolved, there would be easing of price. But, overall, Legend predicted that prices would continue to rise over at least the next six weeks.

“Industry-wide, we see this as the start of an overall tightening in memory supply, reversing the trend of the last four years,” he said.

For more on this story, see this week's issue of ARN.


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